Cannara Biotech, Inc. · TSX:LOVE
Cannara Biotech — Investor Presentation (May 2024)
45 slides from Cannara Biotech's investor presentation, May 31, 2024
Slide 1: Premium-Grade Cannabis at Scale
TSXV: LOVE | OTCQB: LOVFF | FRA: 8CB0 PREMIUM-GRADE CANNABIS AT SCALE INVESTOR DECK Q3 FISCAL 2024 (AS OF May 31, 2024)
Slide 2: General Disclaimer
GENERAL DISCLAIMER This corporate presentation dated May 31, 2024 (the “Presentation”) has been prepared by management of Cannara Biotech Inc. (the “Company” or “Cannara”) and is based on public information. This Presentation does not constitute an offer to sell to any person, or a general offer to
Slide 3: Forward-Looking Statement
FORWARD-LOOKING STATEMENT This presentation contains “forward-looking information” within the meaning of Canadian securities legislation. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this presentation or as of the date of the ef
Slide 4: Executive Summary
EXECUTIVE SUMMARY
Slide 5: Corporate Overview
CORPORATE OVERVIEW We are a vertically-integrated Canadian Licensed Producer of premium-grade cannabis and cannabis-derivative products • Canada’s fourth largest producer based on square footage. Two mega facilities based in Quebec, Canada spanning over 1.6 million square feet. • Currently serving c
Slide 6: Corporate Milestones
CORPORATE MILESTONES MARCH 2018 JANUARY 2019 FEBRUARY 2020 FEBRUARY 2021 JUNE 2021 OCTOBER 2021 AUGUST 2022 $ IDEA CAPITAL CULTIVATION QUEBEC RETAIL LAUNCH VALLEYFIELD OCS RETAIL EXOTIC GENETIX March 2018, idea is Cannara raises over Launches 170,000 sq Retail debut of its 3 ACQUISITION LAUNCH BRAND
Slide 7: Key Investor Considerations
KEY INVESTOR CONSIDERATIONS Well Capitalized, Fast-Growing Business Strategic Brand Portfolio • Trailing twelve-month revenue of $76.9M, gross profit of $29.2M, • Three flagship in-house brands. Adjusted EBITDA of $16.3M and Net income of $5.3M • Brand partnership with Exotic Genetix. • Increased pr
Slide 8: Operations
OPERATIONS
Slide 9: Farnham Facility
FARNHAM FACILITY FARNHAM, QUEBEC LEASED 150,000 sq. ft. 625,000 sq. ft. facility provides 170,000 sq. ft. of LEASED cannabis operation. 294,000 sq. ft. PHASE 1 Fully automated with biomonitoring sensors in every 170,000 sq. ft. 3,500 Kg grow room to ensuring optimal conditions and an increased plant
Slide 10: Valleyfield Facility
VALLEYFIELD FACILITY SALABERRY-DE-VALLEYFIELD, QUEBEC Acquired in June 2021, the facility occupies 1,033,506 sq. ft. on 3,000,000 sq. ft. of land. One of the largest indoor cannabis cultivation facilities in Canada and the largest in Quebec. Provides ability to expand output capacity to 100,000kg of
Slide 11: Valleyfield Facility
VALLEYFIELD FACILITY SALABERRY-DE-VALLEYFIELD, QUEBEC PHASE 1 24 INDEPENDENT GROWING ZONES MEASURING 25,000 SQ.FT EACH 1,033,506 sq. ft. facility The completely automated facility is equipped with cutting edge technology including: : • 578,022 sq. ft. Main cultivation facility LED LIGHTING - FULLY B
Slide 12: The Principals of Our Success
THE PRINCIPALS OF OUR SUCCESS QUALITY ACCESSIBILITY BRAND CULTURE Premium “AAAA” cannabis Disruptive low pricing Grassroot brand culture Hang dried, slow cured Aligned with legacy market Transparency At scale Ideal for your everyday consumers Consumers become ambassadors Q3 FY 2024 | 12
Slide 13: Premium-Grade Cannabis at Scale
PREMIUM-GRADE CANNABIS AT SCALE Delivering a premium-quality product is at the heart of our ethos, resulting in high cannabinoid content and rich flavourful cannabis. Our cannabis employs methods used in the most sophisticated markets in the world such as California; cultivated from: RARE GENETICS H
Slide 14: Exclusive US Brand Partnership in Canada
EXCLUSIVE US BRAND PARTNERSHIP IN CANADA 50 - Time US Award-Winning Seed Breeder EXOTIC GENETIX - Exclusive Canadian Partnership with CANNARA Cannara holds an exclusive license to use, market, sell, and distribute products branded by Exotic Genetix throughout Canada, in addition to its three flagshi
Slide 15: Accessibility
ACCESSIBILITY
Slide 16: Production Assets
PRODUCTION ASSETS CANNARA’S ESTIMATED ANNUAL PRODUCTION CAPACITY IN KG 80,000 kg 75,000 70,000 kg 60,000 kg 57,000 50,000 kg 45,000 40,000 kg 33,500 30,500 30,000 kg 22,000 20,000 kg 10,000 kg 0, kg FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 Q3 FY 2024 | 16
Slide 17: Why Quebec
WHY QUEBEC AVERAGE ELECTRICITY RATES BY PROVINCE IN CENTS PER KW HOUR 3.7¢/kWh CANNARA PREFERRED RATE Quebec has the lowest electricity rates in Canada (QC: 5.3¢/kWh vs. AB: 13.6¢/kWh). MB BC SK ON NS AB QC 5.3¢/kWh 5.9¢/kWh 7.7¢/kWh 8.9¢/kWh 9.8¢/kWh 11.4¢/kWh 13.6 ¢/kWh Quebec has the highest barr
Slide 18: Competitive Advantage
COMPETITIVE ADVANTAGE Focus on delivering premium “AAAA” quality cannabis at disruptive pricing Quality, Scalability and Transparency: • Deliver true to craft like procedures including hang drying and hand trimming cannabis to ensure quality. • Scalability of its premium-grade cannabis by growing in
Slide 19: Q3 FY 2024
Q3 FY 2024 | 20
Slide 20: Our Unique Value Proposition
OUR UNIQUE VALUE PROPOSITION Cannara is giving consumers what they want—premium quality cannabis at accessible, value-based pricing fit for frequent consumers and new entrants alike. The exceptional quality of our top-tier premium cannabis, along with our revolutionary low pricing, has led to an ove
Slide 21: Portfolio of Brands
PORTFOLIO OF BRANDS PREMIUM CANNABIS AT AN AFFORDABLE PRICE Our portfolio consists of three flagship brands – Tribal, Nugz, and Orchid CBD, all with distinctive identities and purpose, each filling a white space in Canada’s current cannabis market without compromising quality. All three brands offer
Slide 22: Tribal brand
Welcome to Tribal, Cannara’s house of genetics flagship brand. With a Canadian exclusive partnership with renowned US breeder Exotic Genetix, Tribal calls on consumers to enjoy the journey of new genetics across a variety of products, from dried flower and pre-rolls to full spectrum extracts and liv
Slide 23: Nugz brand
Nugz, your legacy dealer gone legal, has two staple flower offerings in addition to rotational offerings from Cannara’s grow houses and solventless concentrates. Flavour, potency, and premium quality bulk value are key attributes—when Nugz shows up its high-fives and good times all around! AVAILABLE
Slide 24: Orchid CBD brand
Orchid CBD is changing the perception of cannabis by being the better choice for consumers looking for premium, CBD-dominant and balanced cannabis products. When it comes to flower and pre-rolls, Orchid CBD offers CBD Runtz, a phenomenally well-rounded strain bred by Exotic Genetix. Our flower is ha
Slide 25: Market and Growth Strategy
MARKET and GROWTH STRATEGY
Slide 26: Canadian Recreational Cannabis Market
CANADIAN RECREATIONAL CANNABIS MARKET 2ND LARGEST LEGAL CANNABIS MARKET IN THE WORLD Monthly Retail Sales of Legal Cannabis Stores Legal Recreational Cannabis Market in Canada from October 2018 to December 2023 expected to reach $5.1B by 2029 (in million Canadian dollars) 466,99 446,71 439,29 451,82
Slide 27: Canadian Recreational Cannabis Market: Consumers
CANADIAN RECREATIONAL CANNABIS MARKET The Canadian Consumer Consumption of Cannabis is Growing AVERAGE REVENUE PER CONSUMER NUMBER OF CANADIAN RECREATION CONSUMERS AVG. REVENUE PER CONSUMER (in thousands USD) 1.60 4000.00 CONSUMERS in thousand Consumers 1.40 3500.00 1.20 3000.00 1.00 2500.00 0.80 20
Slide 28: 2024 Looking Ahead
2024 LOOKING AHEAD 1. INCREASE CANNABIS SUPPLY & FOCUS ON COST EFFICIENCIES In 2024, Cannara plans to remain vigilant by focusing on labor and cost efficiencies to continue to improve gross margins. This will provide resilience to Cannara’s platform in current market conditions with continued price
Slide 29: 1. Increase Cannabis Supply
1. INCREASE CANNABIS SUPPLY CANNABIS PRODUCTION & REVENUE GROWTH TRAJECTORY AS VALLEYFIELD PRODUCTION SCALES UP CANNABIS NET REVENUE IN $ MILLIONS CANNABIS PRODUCTION (TRIMMED BUDS) IN KG CANNABIS SOLD IN KG $20M $18.8 8000 kg $18.5 $18.3 $18M $17.2 7000 kg $16M $14.9 6000 kg $14M $12.0 5000 kg $12M
Slide 30: 2. Innovation and Increased Product Offering
2. INNOVATION AND INCREASED PRODUCT OFFERING PRODUCT INNOVATION For 2024, the company is focused on innovation and new product development across all 3 of its flagship brands. The Company is focused on the innovation of new products for 2024 across all 3 of its flagship brands. Innovation in its cat
Slide 31: 3. New Genetic Releases
3. NEW GENETIC RELEASES GELATO MINT CUBAN LINX TERPLE POWER SHERB 2 NEW GENETICS LAUNCHED Q1 2024: INDICA SATIVA HYBRID INDICA JIGGLERS AND DRIP STATION 2 NEW GENETICS RELEASING IN SPRING 2024: NEON SUNSHINE AND BUBBLE UP GALACTIC RUNTZ TRIPLE BURGER DRIP STATION JIGGLERS INDICA INDICA INDICA SATIVA
Slide 32: 4. Increase Market Share
4. INCREASE MARKET SHARE Estimated Cannara Market Share MARKET EXPANSION STRATEGY Q3 2024 & Q2 2024 Cannara has created lean and profitable operations, proven to Province Q3 2024 Q2 2024 % Change produce premium cannabis at scale and at competitive prices. QC 9.70% 9.0% 7.8% With the ability to prod
Slide 33: 5. Continued Adjusted EBITDA, Net Income, and Operating Cash Flows
5. CONTINUED ADJUSTED EBITDA, NET INCOME, AND OPERATING CASH FLOWS The Company’s financial strength shows through across all financial metrics. In 2024, Cannara expects to continue to substantially increase sales while focusing on labor and cost efficiencies resulting in an even stronger financial p
Slide 34: Q3 2024 Financials
cannara’” Q3 2024 FINANCIALS
Slide 35: Q3 2024 Selected Financial Highlights
Q3 2024 SELECTED FINANCIAL HIGHLIGHTS Three-m onth periods ended Nine-m onth periods ended Selected Financial Highlights May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023 Financial Sum m ary Gross revenue 1 $ 19,475,137 $ 15,840,140 $ 58,563,040 $ 38,929,458 Other income 69,779 96,688 148,373 354,
Slide 36: Quarterly Detailed Highlights
QUARTERLY DETAILED HIGHLIGHTS May 31, February 29, November 30, August 31, May 31, February 28, November 30, August 31, 2024 2024 2023 2023 2023 2023 2022 2022 Current assets $ 62,020,524 $ 58,224,875 $ 52,762,707 $ 51,695,836 $ 45,657,986 $ 40,820,665 $ 38,393,438 $ 40,988,684 Non-current assets 86
Slide 37: Total Net Revenues by Quarter
TOTAL NET REVENUES BY QUARTER TOTAL NET REVENUES ANALYSIS BY QUARTER IN $ MILLIONS -- TOTAL NET REVENUE GROSS MARGIN 1 $19.7 $20M $19.5 $19.5 $18.3 $18M $16M $15.9 $14M $13 $12 $12M $10.3 $10M $7.9 $8M $7.1 $6.9 $6.1 $6M $5.7 $5M $4.8 $4.0 $4.0 $4M $3M $2M $1M 40% 39% 31% 38% 38% 41% 36% 29% $0M Q4
Slide 38: Financial Ratios Comparison vs Peers
FINANCIAL RATIOS COMPARISON VS PEERS SIGNIFICANT GROWTH RATE WITH STRONG MARGINS RELATIVE TO PEERS Canopy Village Avant Tilray Aurora Organigram Cannara Decibel Rubicon Growth Farms Brands Market Cap in M 2070 1018 428 230 163 55 25 19 27 Revenue (LTM) in M 514 330 270 153 402 77 109 28 31 Revenue G
Slide 39: Leadership Team
LEADERSHIP TEAM
Slide 40: Executive Leadership Team
EXECUTIVE LEADERSHIP TEAM ZOHAR KRIVOROT NICHOLAS SOSIAK AVI KRIVOROT CHAIRMAN & CEO CFO CTO Zohar is an entrepreneur who has launched Nicholas is a CPA with an entrepreneurial spirit Avi has been in the information technology several successful businesses. He has founded, and passion for the Cannab
Slide 41: Executive Management Team
EXECUTIVE MANAGEMENT TEAM ISSAM BEN MOUSSA NOEMI FOLLAIN ANTHONY MANOUK VP PRODUCTION & EXPERIMENTATION VP FINANCE GM & VP COMPLIANCE Issam is an engineer in Agronomy & Noemi is a Chartered Professional Anthony is an accomplished business biotechnology and has a PhD in plant Accountant and have 8 ye
Slide 42: Executive Management Team Continued
EXECUTIVE MANAGEMENT TEAM CONTINUED BRIAN SHERMAN VP LEGAL AFFAIRS FRANCE LANDRY VP HUMAN RESOURCES Brian brings industry experience having served as a senior member of the legal France joins the Cannara team with over team at Canopy Growth, one of 17 years of experience in human Canada's most estab
Slide 43: Board of Directors
BOARD OF DIRECTORS ZOHAR KRIVOROT MARY DUROCHER CHAIRMAN & CEO DIRECTOR Zohar is an entrepreneur who has launched several successful businesses. He has founded, advised and invested in numerous companies including 911ENABLE™ which he led from start-up to its acquisition by West Telecom in 2014. Zoha
Slide 44: Positioned for National Success
IN SUMMARY Well capitalized, fast-growing business with an Operating with strong margins and with a established history of execution. focus on positive EBITDA, positive cash flow and organic growth through capital Offering customers the highest value reinvestment. products at disruptive low prices.
Slide 45: Thank You
TSXV: LOVE | OTCQB: LOVFF | FRA: 8CB0 THANK YOU www.cannara.ca investors.cannara.ca www.instagram.com/cannarabiotech www.facebook.com/cannarabiotech CANNARA HEADQUARTERS FARNHAM FACILITY VALLEYFIELD FACILITY 333 Decarie blvd, Suite 200 1144 Boulevard Magenta E 1175 Boulevard Gérard-Cadieux Saint-Lau