Corporate Presentation April 2017 CSE: CRZ OTCQB: CNNRF

Transcription

1 Corporate Presentation April 2017 CSE: CRZ OTCQB: CNNRF

2 INVESTOR PRESENTATION STOCK DISCLAIMERS Forward Looking Information This investor presentation dated April 2017 (the Presentation ) contains forward-looking information regarding CannaRoyalty Corp. ( CannaRoyalty or the Company ) and its subsidiaries. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management s assessment of future plans and operations and are based on current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Often, but not always, forward-looking statements can be identified by the use of words and phrases such as plans, expects, is expected, budget, scheduled, estimates, forecasts, intends, anticipates, or believes or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and are based on various assumptions such as: (i) the Company s ability to generate cash flow from operations and obtain necessary financing on acceptable terms; (ii) general economic, financial market, regulatory and political conditions in which the Company operates; (iii) consumer interest in Company products; (iv) anticipated and unanticipated costs; (v) government regulation of the Company s activities and products; (vi) the timely receipt of any required regulatory approvals; (vii) the Company s ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the Company s ability to conduct operations in a safe, efficient and effective manner; (viii) and the Company s construction plans, expansion of facilities, its costs and timeframe for completion of such plans. Forward-looking statements are not guarantees of future performance and undue reliance should not be placed on them. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of CannaRoyalty to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Many of these risk factors and uncertainties are discussed in the Company s Annual Information Form in a section entitled Risk Factors and other documents the Company files with the Canadian Securities Administrators available on SEDAR at Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this Presentation and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Securities Laws This Presentation is for informational purposes and does not constitute an offer or a solicitation of an offer to purchase the securities referred to herein. No Reproduction or Distribution The contents of this presentation are not to be reproduced or distributed to any third party, including the general public or the media, without the express written consent of CannaRoyalty. The information contained herein, while obtained from available sources which the Company believes are reliable, is not guaranteed as to its accuracy or completeness. Third Party Information Certain information contained in this Presentation with respect to market trends and products has been obtained or quoted from publicly available sources, such as continuous disclosure documents, independent publications, media articles, third party websites (collectively, the Publications ). In certain cases, these sources make no representations as to the reliability of the information they publish. Further, the analyses and opinions reflected in these Publications are subject to a series of assumptions about future events. There are a number of factors that can cause the results to differ materially from those described in these publications. None of the Company or its representatives independently verified the accuracy or completeness of the information contained in the Publications or assume any responsibility for the completeness or accuracy of the information derived from these Publications. Additional Information Additional information relating to the Company has been filed electronically through SEDAR and is available online at or at the Company s website at

3 An Unparalleled Global Opportunity $150 Billion Global Market in 2016 (source: Viridian Capital Advisors) U.S. cannabis market forecast to hit $50 Billion by 2026, a 24% CAGR over the next 10 years (source: Cowen & Co.) GLOBAL CANNABIS REFORM Legal or Moving Towards Legal Cannabis Use Source: Consolidated at

4 Strategic Capital + Functional Expertise to Support a Diversified Portfolio of Cannabis Holdings CannaRoyalty at a Glance Founded: February 2015 Head Office: Ottawa, Canada U.S. Office: Irvine, CA First Trade Date: December 8, 2016 Ticker Symbols: CSE: CRZ OTCQB: CNNRF Shares O/S: 41.7 million (basic) ROYALTY AGREEMENTS EQUITY INVESTMENTS TOTAL HOLDINGS 25 LICENSING DEALS CONVERTIBLE DEBENTURES

5 The Cannabis Market Challenge A UNIQUE MIX OF OBSTACLES FACE ENTREPRENEURS SEEKING TO COMMERCIALIZE PRODUCTS IN THIS SPACE GROWTH CAPITAL LEGAL COMPLEXITY BRAND & MARKETING SCALED PRODUCTION DISTRIBUTION Banks and traditional institutions not open to investing in the complex emerging cannabis market. Laws and regulations vary by state and country. Taking a product at start-up phase to a professionally branded, marketed asset takes expertise & resources. Facilities to produce at large scale, that meet legal and code regulations, are required in each sales region. Logistics requirements and regulations are complex and vary by jurisdiction.

6 OUR SOLUTION An integrated platform designed for commercialization in 3 high-value segments of the global cannabis market RESEARCH / IP CR BRANDS INFRASTRUCTURE

7 RESEARCH / IP DEVELOPING INTELLECTUAL PROPERTY AND PATENTS IN CUTTING-EDGE SCIENCE, TARGETING HEALTH AND WELLNESS APPLICATIONS

8 RESEARCH / IP ANANDIA LABS CANADIAN LEADER IN CANNABIS TESTING, EXTRACTION AND GENETICS Laboratory facility exclusively focused on cannabis analytical testing Extensive Genetics IP portfolio Health Canada Dealers License, which allows: Extraction, research and product development beyond what current ACMPR regulations allow for current Licenced Producers Global import and export of cannabis CannaRoyalty Relationship: 20% Equity Interest

9 RESEARCH / IP BODHI RESEARCH RESEARCH TRIALS EXPLORING THE USE OF CANNABIS IN THE TREATMENT OF CONCUSSIONS AND POST-CONCUSSIVE SYNDROME Led by foremost expert in concussions, Dr. Neilank Jha Observational trials commenced Fall 2016, patent pending on proprietary formulation CannaRoyalty Relationship: 10% Equity Interest, with option to increase to 20%

10 CR BRANDS A PREMIUM POSITONED STABLE OF CONSUMER BRANDS IN MEDICAL, WELLNESS AND ANIMAL HEALTH

11 IN DISTRIBUTION GREENROCK BOTANICALS VAPE PENS AND CARTRIDGES EMPHASIZING EASE OF USE, TOP QUALITY, AND RELIABLE PERFORMANCE Launched in California Market White-label in Arizona Designed specifically for cannabis extracts to deliver consistent experience Manufactured using premium componentry including glass, steel and ceramic atomizer CannaRoyalty Relationship: 100% Equity Interest in DreamCatcher Labs VAPING IS ONE OF THE FASTEST GROWING SEGMENTS OF THE CANNABIS MARKET 2016 State of Cannabis Data Report

12 IN DISTRIBUTION ACHELOIS (DERMALEAF SKINCARE) UNIQUE, PROPRIETARY FORMULATION COMBINING FIBROBLAST WITH CANNABIS Launched in California and Puerto Rico Markets Burn Therapy, Skin Repair, and Anti-Wrinkle formulations CannaRoyalty Relationship: 70% Equity Interest HUMAN SKIN CONTAINS A NETWORK OF CANNABINOID (CBD2) RECEPTORS THAT ARE TARGETED BY TOPICALS

13 IN DISTRIBUTION SOUL SUGAR KITCHEN AWARD-WINNING, GOURMET QUALITY HAND CRAFTED CANNABIS EDIBLES Launched in California Peanut Butter Cups, Hand-formed Truffles, Snack Mixes CannaRoyalty Relationship: 100% Equity Interest COLORADO SALES DATA SHOWS THE EDIBLES CATEGORY SURGING UP BY MORE THAN 50% AS THE MARKET EVOLVES

14 EQUITY RESOLVE DIGITAL HEALTH (BREEZE) TRULY SMART METERED-DOSE INHALER FOR MEDICAL CANNABIS DELIVERY Tracks medication, connects to easy-to-use imbedded app Uses Smartpod system to load product cleanly and easily Pods geared for specific ailments: relief, sleep, calm, anti-inflammatory, control, energy, appetite CannaRoyalty Relationship: 27.2% Equity Stake in Parent Company Resolve Digital Health Inc. $7.1 MILLION = VALUE OF 27.2% EQUITY STAKE BASED ON RESOLVE'S MOST RECENT FINANCING PRICE

15 LICENSED NUTRAE LLC MüV CANNABIS PATCHES TRANSDERMAL PATCH TIME RELEASE DELIVERY OF MEDICAL CANNABIS Discreet, dosage-controlled and smoke-free delivery of cannabis, in THC, CBD and 1:1 Blended options Part of a full family of products topicals, concentrates, vaping, tinctures, oral spray, and more CannaRoyalty Relationship: i) Revenue royalty of 3.5% on global sale of all NuTrae products ii) Right to License in Canada, Puerto Rico, California, Nevada, Massachusetts, Washington, Oregon TRANSDERMAL PATCH DELIVERY OF PHARMACEUTICALS IN 2016 WAS A $7 BILLION MARKET.

16 LICENSED NUTRAE LLC MüV CANNABIS INHALER METERED-DOSE INHALER FOR MEDICAL CANNABIS DELIVERY Discreet, dosage-controlled and smoke-free delivery of cannabis, in THC, CBD and 1:1 Blended options. Part of a full family of products topicals, concentrates, vaping, tinctures, oral spray, and more. CannaRoyalty Relationship: i) Revenue royalty of 3.5% on global sale of all NuTrae products ii) Right to License in Canada, Puerto Rico, California, Nevada, Massachusetts, Washington, Oregon INHALERS OFFER DOCTORS AN IDEAL SMOKE-FREE ROUTE FOR PRESCRIBING DOSED MEDICAL CANNABIS

17 INFRASTRUCTURE INDUSTRY INFRASTRUCTURE BUILT TO SUPPORT AND ACCELERATE THE COMMERCIALIZATION OF CANNAROYALTY ASSETS

18 INFRASTRUCTURE DREAMCATCHER LABS INDUSTRIAL FILLING & PACKAGING SYSTEMS Manufactures and produces GreenRock Botanicals brand Proprietary designs Launched in California and Arizona markets Industrial-scale filling & packaging systems 1 large-scale industrial auto-filling machine capable of filling up to 1 million cartridges per month 2 small mobile industrial auto-filling machines capable of filling up to 100,000 cartridges per month CannaRoyalty Relationship: 100% Equity Stake MASS PRODUCTION CAPACITY OF MORE THAN 1 MILLION CARTRIDGES PER MONTH

19 INFRASTRUCTURE WAGNER DIMAS MANUFACTURING IP THAT ENABLES CONSISTENT, HIGH QUALITY PRODUCTION AT SCALE Strong launch in California market 8 co-packing (private label) clients in California Licenses secured in Nevada, Colorado Produces pre-rolled smoke-ready format using an industry-leading, innovative machine-rolled process CannaRoyalty Relationship: 20% Equity $1B PRE-ROLLS CURRENTLY REPRESENT 14% OF THE OVERALL $6.7 BILLION U.S. CANNABIS MARKET 2016 Marijuana Business Factbook $5.7B

20 INFRASTRUCTURE APHRIA INC. ROYALTY ON REVENUES OF CANNAROYALTY PRODUCTS IN CANADA Exclusive right to commercialize CR Brands products, including: Cartridges Softgels Transdermal patches Edibles Pre-rolls Sensuals CannaRoyalty Relationship: 5% gross revenue royalty on CR Brands products for Canadian market; 5 year term from date of first sale LEADING CANADIAN LP WITH PROVEN DISTRIBUTION EXPERTISE WELL POSITIONED FOR COMING FULL LEGALIZATION IN CANADA

21 INFRASTRUCTURE NATURAL VENTURES PUERTO RICO CULTIVATION, MANUFACTURING AND DISTRIBUTION Holds PR market s largest cannabis licenses 100,000 SF cultivation facility 30,000 SF manufacturing facility Product Licensing Revenue = 10% Royalty on CR Brands CannaRoyalty Relationship: 2.5% Net Income Royalty for 10 years, and 10% Licensing Royalty on Revenue from sale of CR Brands products WITH 100,000 ESTIMATED PATIENTS, THE PUERTO RICO MARKET IS COMPARABLE IN SIZE TO COLORADO S

22 INFRASTRUCTURE RICH EXTRACTS LLC AWARD-WINNING MANUFACTURER AND DISTRIBUTOR OF EXTRACTS Largest lab and extract production facility in Oregon Extractor units capable of producing 60,000 grams per month Product line includes: Distillates Shatter Concentrates CannaRoyalty Relationship: 30% Royalty on Gross Revenues in perpetuity OREGON S LARGEST PROCESSING FACILITY WITH CAPACITY TO PRODUCE IN EXCESS OF 60,000 GRAMS PER MONTH

23 INFRASTRUCTURE CASCADIA HOLDINGS REAL ESTATE HOLDINGS, TURN-KEY DESIGNED & EQUIPPED FOR LICENSED CANNABIS TENANTS (wholly owned subsidiary of AltoTerra Capital) American Nutraceutical building (9,000 SF) Permit granted for full scale extraction and processing Aroma Essential Oil Extractions building 9,000 SF of leasable space upon completion Koda Distribution Sales team led by former Seattle Seahawk Hillary Butler Relationships with over 200 dispensaries CannaRoyalty Relationship: 30% Royalty on Gross Revenues in perpetuity ONE OF WASHINGTON S LARGEST NETWORK OF PRODUCTION FACILITIES

24 INFRASTRUCTURE ALTMED ENTERPRISES LLC MANUFACTURE AND DISTRIBUTION OF MEDICAL CANNABIS PRODUCTS CannaRoyalty Relationship: 8.2% Equity Interest Invested US$1.5 US$10 million valuation (04/15) Post-money valuation of US$32 million (3rd party financing 08/15) Founded by Principals of MedImmune (acquired by Astra Zeneca) NuTrae LLC (MüV products) Delivery systems, including: transdermal patch, metered-dose inhaler, vape pens First products on market Q Distribution in place in Arizona, pending in Colorado AltMed Arizona AZ: 90% interest in 34,000 square foot, indoor licensed cultivation and extraction facility, expansion planned for over 120,000 square feet of greenhouse space on 6 acres of owned land CO: 10% interest in a company with real estate and agriculture holdings focused on cannabis sector AltMed Florida Planned Florida cultivation, dispensary, laboratory, extract facility

25 INFRASTRUCTURE RIVER WELLNESS & DISTRIBUTION (closing expected April 2017) LEADING DISTRIBUTION COMPANY IN CALIFORNIA MARKET Largest permitted distributor in California based on revenue and market reach Strong expected CAGR in excess of California market growth rates Currently selling into 400+ dispensaries US$15mm minimum purchase agreement of CR Brands products for CA market CannaRoyalty Relationship: 2.25% 1.75% Revenue Royalty until end of 2024, preferred product distribution relationship THE CANNABIS MARKET IN CALIFORNIA IS ESTIMATED TO BE MORE THAN $2.75 BILLION

26 Diversity of Holdings across North America CANNABIS LEGALIZATION* Legal Medical & Adult Recreational Use Legal Medical Use CannaRoyalty s assets and holdings in California, Washington, Oregon, Arizona, Canada, Puerto Rico *As mandated by 2016 U.S. Election Day results. Puerto Rico

27 Assets & Holdings ROYALTY AGREEMENTS Cascadia Holdings (Washington) 30% of revenue in perpetuity Rich Extracts (Oregon) 30% of revenue in perpetuity River Wellness (California) 2.25% revenue royalty until capital investment recovered; 1.75% for balance of 8 year term (subject to closing) Aphria (Canada) 5% of gross sales of all CannaRoyalty licensed products in Canada for 5 years NuTrae (MüV products) 3.5% for 10 years Natural Ventures (Puerto Rico) 2.5% net income royalty for 10 years from first commercial sales Three Leaf Holdings (North America) 1.5% for 2 years EQUITY INTERESTS (CONTROLLED) DreamCatcher Labs 100% Electric Medialand 100% Achelois (DermaLeaf Skin Care) 70% PROPRIETARY BRANDS GreenRock Botanicals DermaLeaf Skin Care Soul Sugar Kitchen Freya Intimacy Oil Best Buds Animal Health OUT-LICENSING AGREEMENTS Soul Sugar Kitchen CA, WA IN-LICENSING AGREEMENTS Absolute Extracts WA, Canada Care by Design WA, Canada MüV Canada, Puerto Rico, WA, OR, CA, NV, MA EQUITY INTERESTS - 20% to 50% Anandia Labs 20% Bodhi Research 10% (with option to increase to 20%) Wagner Dimas 20% Resolve Digital Health 27% Mobile Medicine 50% JV EQUITY INTERESTS < 20% Alternative Medical Enterprises 8.2% Eureka Management Services 6% SECURED, CONVERTIBLE LOANS Eureka Management Services (convertible to additional 10% equity stake) BAS Research (convertible at 20% discount to Series A financing)

28 41.7mm SHARES OUTSTANDING Capital Structure CSE: CRZ OTCQB: CNNRF 3.25mm incentive RSUs and options issued 918,993 warrants, exercisable at $1.50/share 175,140 warrants, exercisable at $2/share 2.65mm warrants, exercisable at $4.50/share $1.5mm convertible debt with Aphria Inc. (convertible at $2/share) 50.4mm FULLY DILUTED SHARES Previous financings 03/15: C$0.50/share 06/15: C$0.75/share 06/16: C1.00/unit 10/16 (RTO): C$5mmm at C$2.00/share C$15 million bought deal financing closed February 15, C$3.00/unit Insider ownership ~12% (all subject to Lock-up/CSE Escrow)

29 Management Team Marc Lustig Chief Executive Officer 16 years in healthcare, capital markets. Greg Wilson Chief Operating Officer Co-Founder, Paramount Gold, 20+ years corporate strategist, financier. A forward-looking management team with financial markets expertise, clear strategic vision and strong science guidance backed by real-world cannabis know-how. Francois Perrault Todd Marcotte Dave Vautrin Afzal Hasan Andra Enescu Chief Financial Officer Former CFO of CSC Canada. Chief Marketing Officer Founder, Electric Medialand, 30 years in marketing, brand development. President, CR Brands 22 years of Consumer Product Goods operational experience. General Counsel Broad experience with public listings and prospectus financing. Legal Counsel & Corporate Development

30 Board of Directors Dr. James F. Young, PhD Chuck Rifici, CPA Rob Harris Marc Lustig Greg Wilson 30 years in pharmaceutical development Chairman, Novavax, Inc. (Nasdaq:NVAX) Co-Founder Medlmmune Founder and former CEO of Canopy Growth Corp. (TSX: CGC) CEO of Nesta Holding Co. Director of Aurora Cannabis. 35+ years in Canada/US pharmaceutical industry CEO of Tribute Pharmaceuticals Former VP at Biovail Corporation Chief Executive Officer 16 years in healthcare, capital markets. Chief Operating Officer Co-Founder, Paramount Gold, 20+ years corporate strategist, financier.

31 Value Proposition Diversified platform of holdings in High Value segments of cannabis market across North America Strategic Capital, functional know-how and first mover advantage to drive maximum returns Transitioning into period of Revenue Growth & Cash Flow driven by the consolidation of current assets & royalty streams, combined with product launches Focus on value creation and upside potential of individual investee companies Growing Pipeline with new royalty opportunities & asset acquisitions in key segments & geographies