TSX:LEAF Investor Presentation December 2017 Top Licensed Producer Price Close (Dec 7, 2017): $15.47 Market Capitalization: $1.5 billion Basic and F.D. Shares: 94.1/101.4 million
Forward-Looking Information This Presentation contains forward-looking information within the meaning of applicable Canadian securities legislation which are based upon the Company s current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified by the use of forward-looking terminology such as expect, likely, may, will, should, intend, anticipate, potential, proposed, estimate and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions may, would or will happen, or by discussions of strategy. Forward-looking information include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Forward-looking information in this Presentation is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable in the circumstances as at the date hereof. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. In particular, we have made assumptions in respect of the build-out of the Bradford Facility; our competitive advantages; the expected legalization of cannabis use in Canada; the growth of our business and expansion into new markets; the development of new products and product formats for our cannabisbased pharmaceutical products; our ability to retain key personnel; our ability to continue investing in our infrastructure to support our growth; our ability to obtain and maintain financing on acceptable terms; the impact of competition; the changes and trends in the medical cannabis industry; and changes in laws, rules and regulations. Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as of the date hereof, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual actions, events, results, performance or achievements to differ materially from what is projected in forward-looking information, including but not limited to the risks described in greater detail in the section entitled Risk Factors in our most recent annual information form available on SEDAR at www.sedar.com. Although we have attempted to identify important factors that could cause actual actions, events, results, performance or achievements to differ materially from those described in forward-looking information, there may be other factors not presently known to us or that we presently believe are not material that may cause actions, events, results, performance or achievements to differ from those anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize or should assumptions underlying the forward-looking information prove incorrect, actual actions, events, results, performance or achievements may vary materially from those expressed and implied by such statements contained in this Presentation. The purpose of forward-looking information is to provide the reader with a description of management s expectations, and such statements may not be appropriate for any other purpose. Accordingly, readers should not place undue reliance on forward-looking information. Although the Company believes that the expectations reflected in statements containing forward-looking information are reasonable, it can give no assurance that such expectations will prove to be correct. The Company disclaims any obligation to update any forward-looking information, whether as a result of new information or future events or results, except to the extent required by applicable securities laws. Non-IFRS Measures This Presentation refers to certain non-ifrs financial measures including Adjusted Product Contribution Margin, Cash Cost Per Gram Sold and Adjusted EBITDA (i.e., Adjusted Earnings Before Interest, Tax, Depreciation and Amortization). See the section entitled Non-IFRS Measures in our Management s Discussion and Analysis for the quarter ended September 30, 2017 available on SEDAR at www.sedar.com. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing additional information regarding the Company s results of operations from management s perspective. Accordingly, non-ifrs measures should not be considered in isolation nor as a substitute for analysis of the Company s financial information reported under IFRS. 2
Setting the standard: Our Strategy PHARMACEUTICAL BREWERY BEVERAGE CONSUMER PRODUCTS Winners emerge and dominate 3
Decisions that set the standard Quality assurance Patient-centric approach Analytically-driven operations Ongoing innovation CANADIAN MEDICAL DRIED CANNABIS MARKET SHARE Total volume sold for the twelve month period ending June 2017 1 79 Licenses 2 18% MedReleaf Producing premium cannabis 82% Rest of the Licensed Producers 1) Source: Health Canada (most recent available data) and MedReleaf 2) Licenses held by producers as of December 7, 2017 4
Setting the standard: Performance CASH COST PER GRAM GRAMS PRODUCED PER SQUARE FOOT 1 $3.50 $3.00 $2.50 ~ 300g $2.00 $1.50 CASH COST PER GRAM 1 $1.46 $1.00 Q2 F16 Q3 F16 Q4 F16 Q1 F17 Q2 F17 Q3 F17 Q4 F17 Q1 F18 Q2 F18 1) For the three months ended September 30, 2017 5
High growth with strong margins 109% 19.3 DRIED CANNABIS Revenue Volume ($ millions) (kilograms) $8.31 $9.34 AVG. PRICE PER GRAM AVG. PRICE PER GRAM 40.3 3,668 117% $1.46 46% CASH COST PER GRAM 19.6 4% 20.3 1,689 1,508 2,208 $6.75 ADJ. CONTRIBUTION MARGIN PER GRAM EXTRACTS $13.97 AVG. PRICE PER GRAM F2016 F2017 H1F17 H1F18 F2016 F2017 H1F17 H1F18 Dried Cannabis Other Extracts Revenue and volume shipped for fiscal year ending March 31 and six months ending September 30 70%+ ADJ. PRODUCT CONTRIBUTION MARGIN (THREE MONTHS ENDED SEPTEMBER 30, 2017) 6
Focused on profitability STRONG ADJ. EBITDA GENERATION ($ millions) 13.9 8.1 4.6 2.6 F2016 F2017 H1F17 H1F18 Adj. EBITDA for the fiscal year ending March 31 and the six months ending September 30 AVERAGE CONSUMPTION National 0.75 s GRAMS PER DAY MedReleaf 1.35 GRAMS PER DAY 1.8x NATIONAL CONSUMPTION AVERAGE National average based on Health Canada reports from January 1, 2017 to March 31, 2017 (the most recent information available from Health Canada). MedReleaf average from January 2017 to March 2017. Assumes that the national average remained the same for the period of January 2017 to March 2017. 7
55,000 sq. ft. facility 23,500 sq. ft. in cultivation 7,000 kg/yr capacity Markham facility 8
Facility expansion CULTIVATION CAPACITY (KG/YEAR) $40.3 million Revenue in F2017 Bradford First Harvest Completed Jul 2017 Sales licence Nov 2017 12,600 Total 5,600 28,000 7,000 7,000 7,000 M A R K H A M M A R K H A M + B R A D F O R D ( C U R R E N T ) 35,000 Total M A R K H A M + B R A D F O R D ( F U L L C A P A C I T Y ) Bradford Facility 4x Markham 210,000 sq. ft. R&D LABS INDUSTRIAL KITCHEN PHARMACEUTICAL MANUFACTURING 9
Business Overview 10
Indoor LIGHT CO2 NUTRIENTS HUMIDITY PRUNING TEMPERATURE MAXIMUM CONTROL FORMATION Higher quality Premium pricing 11
Quality assurance Fully-integrated cannabis producer, processor and distributor Only cannabis company in Canada ISO 9001 CERTIFIED & ICH-GMP COMPLIANCE CERTIFICATION 400+ QUALITY CONTROL CHECKS 12
Patient centric PATIENT SAFETY third-party tested for over 300 pesticides and other contaminants exclusive locking container PATIENT-DRIVEN PRODUCT DEVELOPMENT 1,000s of completed patient surveys patient-centric strain development FAST AND CONVENIENT DELIVERY same day shipping same day delivery in the GTA 89% customer satisfaction 13
Accessing channels, not just patients Chronic condition + payor Veterans (PTSD) Healthcare spending accounts Employee benefit plans Deploying analytics to identify high lifetime value patients whose conditions are shown to benefit from cannabis 14
Ongoing innovation: A science-driven approach Serving patients better Plant & process productivity 1,000s of data records collected over 10 years INNOVATE Plant genetics Plant molecular biology Bioprocess engineering Food science and nanotechnology Clinical microbiology and biochemistry Clinical research ITERATE University of Toronto Hamilton Health Sciences University of Waterloo Sunnybrook Health Sciences Centre 15
Our portfolio: Producing premium cannabis Proprietary genetics Tikun Olam lines Seed bank Breeding program Product lines 20+ dried products 6 oil products 4 capsule products 1 topical cream 1st place awards Top Licensed Producer (2017) Top Indica (2017, 2015) Top Sativa (2016) Top High THC Flower (2017) Top High CBD (2017, 2016, 2015, 2014) Top High CBD Oil (2017) 2 nd Place Awards (2017) Top Customer Service Top Compassionate Pricing Top Packaging Top Hybrid 16
Growth drivers MEDICAL NEW PRODUCTS RECREATIONAL INTERNATIONAL 17
Medical market is poised to grow tenfold Market growth ANNUAL CANADIAN MEDICAL CANNABIS MARKET $1.3 B Increasing Physician Education: First Pharmacogenetics-Based Cannabis Compatibility Test PRESCRIBING 10-15% ReleafDX TM $363 M Q217 Annualized* 2024 *Based on Health Canada reported volume for the 3 months ending June at $7.50/gram ~75,000 NON-PRESCRIBING? DOSAGE? STRAIN 18
First licensed producer in Canada with an oil-capsule product and topical cream MEDRELEAF EXTRACTS % of Sales 18% Precise dosing for patients and physicians 3% Q3 F17 Q2F18 Avidekel Midnight Sedamen Luminarium Proven ability to launch novel new products 19
$5-9B Canadian recreational market opportunity FREQUENT USERS OCCASIONAL USERS BRAND X BRAND Y BRAND Z Data driven and expert advised 20
Germany Participating in the next phase of the domestic cultivation licensing process Exporting our expertise Focused on international partnerships that leverage our strategic value in order to replicate our Canadian success Brazil Completed first ICH-GMP certified commercial export and the country s first import of cannabis-oil Australia Partners have received cannabis cultivation and production licence 21
Management Neil Closner Chief Executive Officer 20 years of start-up, technology, and healthcare experience Former VP of Business Development at Mount Sinai Hospital Chairman of the Board of Cannabis Canada Association Eitan Popper President Over 15 years of international partnerships, large scale project development, and engineering experience Oversees infrastructure and cultivation Igor Gimelshtein Chief Financial Officer Over 7 years in private equity and investment banking Former VP at Birch Hill Equity Partners, a leading private equity firm in Canada Angelo Fefekos Vice President, Clinical Affairs and Quality Compliance Over 10 years experience in quality assurance and laboratory technology Previously managed a division of Diagnostic Medical Genetics and Allograft Technologies at Mount Sinai Hospital Management owns 7.8% 1 Donald Courtney Chief Operating Officer Over 20 years of global operations and supply chain experience in the wine, food, CPG and technology sectors. Previously at Vincor International, Pepsi Canada, and Mars Incorporated; served as COO of LG Electronics Canada Darren Karasiuk Vice President, Strategy Over 15 years of insight generation, marketing strategy and public affairs experience Previously VP, Insights and Advisory at Deloitte where he was a leader in the cannabis practice 1Based on 101.4 million fully diluted shares outstanding 22
Setting the standard PHARMACEUTICAL BREWERY BEVERAGE CANNABIS Winners emerge and dominate 23
Investor Presentation December 2017