MJBizDaily Investor Intelligence

MJBiz Daily | Investor Intelligence mjbizdaily.com/investing Copyright 2019, Marijuana Business Daily, a division of Anne Holland Ventures Inc. You may NOT copy this report, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call 720.213.5992 x1. 1 D eveloping a better understanding of the top investment opportunities unfolding in the global cannabis industry requires a high-level review of the major market developments that materialized in the past year. Expanded legalization in new U.S. states and the launch of Canada’s adult- use market helped fuel investor interest and sparked a capital-market frenzy. Cannabis firms across North America raised a record $13.9 billion in 2018 – nearly four times the amount raised in 2017, according to data tracked by Viridian Capital Advisors. 2016 2017 2018 2019 Year $9.0B 383 $4.2B 182 $2.0B 245 $1.0B 164 BY THE NUMBERS: North American Capital Raises Source:ViridianCapitalAdvisors ©2019MarijuanaBusinessDaily,adivisionofAnneHollandVentures Inc.All rights reserved. Location Canada U.S. As more capital flows into the industry in 2019, here’s a breakdown of the key market metrics and deal-flow trends that are shaping the investment opportunities ahead: PUBLIC VS. PRIVATE RAISES Public companies in Canada and the U.S. have been the top fundraisers, accounting for $9.8 billion – more than 70% of the raises inked in 2018. Those deals included Constellation Brands’ investment of $3.8 billion into Canopy Growth, a record-setting bet for the industry. Removing this outlier lowers the amount raised by publicly traded companies to $5.9 billion, or 42.6% of total funds raised. As the industry matures, top-performing companies are attracting larger tranches of capital from strategic, institutional-level inves- tors and corporations. Investors can expect to see continued investments from Big Alcohol and Big Tobacco over the course of the year. Already, tobacco giant Altria Group has a pending $1.8 billion investment into Canadian licensed producer Cronos, which is slated to close by the second quarter. EQUITY VS. DEBT RAISES Nearly 80% of the capital raised came in the form of equity investments versus debt financing – a key signal that investor risk tolerance for opportuni- ties in cannabis is increasing. “Investors pursuing the upside equity returns versus the downside protection of debt represents a recognition of the sus- tainability of growth rates in the cannabis marketplace,” said Scott Greiper, president at Viridian Capital Advisors. M&A ACTIVITY SPIKES M&A activity more than doubled with nearly 320 deals logged. Public compa- nies, able to use their stock as currency, fueled the buying spree – accounting for 78% of the 2018 activity. With continued consolidation expected in 2019, investors should carefully consider how firms are looking to expand their footprint. Execution among operators will be key in determining how accre- tive or dilutive these all-stock deals and acquisitions will be for shareholders. Analyzing the Metrics that Matter Week Ended 1/5/18 1/12/18 1/19/18 1/26/18 2/2/18 2/9/18 2/16/18 2/23/18 3/2/18 3/9/18 3/16/18 3/23/18 3/30/18 4/6/18 4/13/18 4/20/18 4/27/18 5/4/18 5/11/18 5/18/18 5/25/18 6/1/18 6/8/18 6/15/18 6/22/18 6/29/18 7/6/18 7/13/18 7/20/18 7/27/18 8/3/18 8/10/18 8/17/18 8/24/18 8/31/18 9/7/18 9/14/18 9/21/18 9/28/18 10/5/18 10/12/18 10/19/18 10/26/18 11/2/18 11/9/18 11/16/18 11/23/18 11/30/18 12/7/18 12/14/18 12/21/18 12/28/18 0K 2K 4K 6K 8K 10K 12K 14K Value of Raises Year-to-Date North American Canabis Capital Raises in 2018 Year 0 50 100 150 200 250 300 350 400 450 500 550 600 Number of Capital Raises 2018 476 121 Capital Raises Year-to-Date (in millions of U.S. dollars) Raise Type Equity Debt Source: Viridian Capital Advisors © 2019 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved.