AN UNMATCHED PLATFORM FOR THE GLOBAL CANNABIS OPPORTUNITY 1 Forw - - PowerPoint PPT Presentation

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31st ROTH Conference March 17-19, 2019

AN UNMATCHED PLATFORM FOR THE GLOBAL CANNABIS OPPORTUNITY

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Forw rward Lo Lookin ing St Statements

This presentation contains certain "forward looking statements". These statements relate to future events or future performance and reflect the Company's expectations regarding its growth, results of operations, performance, business prospects, opportunities or industry performance and trends. These forward looking statements reflect the Company's current internal projections, expectations or beliefs and are based on information currently available to the Company. In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict" , "potential", "continue" or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from the results discussed in the forward looking

• statements. In evaluating these statements, you should specifically consider various factors, including, but not

limited to, such risks and uncertainties as availability of resource, competitive pressures and changes in market activity, risks associated with U.S. and Canadian sales and foreign exchange, regulatory requirements and all of the other "Risk Factors" set out in the Company's current Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2018, which are available electronically at www.sedar.com. Actual results may differ materially from any forward looking statement. Although the Company believes that the forward looking statements contained in this presentation are based upon reasonable assumptions, you cannot be assured that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this presentation, and other than as specifically required by applicable law, the Company assumes no obligation to update or revise them to reflect new events or circumstances.

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PRICE

TSX:VFF NASDAQ: VFF US$12.75

MARKET CAPITALIZATION

~ US$608 M

(basic)

SHARES OUTSTANDING

47.7 M

(basic)

51.2 M

(diluted)

52-WEEK HIGH/LOW

US$13.97 US$2.93

MANAGEMENT & BOARD OWNERSHIP

~22%

LISTING SYMBOL

(As of March 13, 2019)

~ US$653 M

(diluted) Publicly traded company since 2006 Very strong alignment of management and shareholders

Mark rket Facts

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Canadian Legal Cannabis:

$4B+ in 20191

US Legal Cannabis:

$25B by 20252

Global Legal Cannabis:

$146B+ by 20253

• 1. Deloitte
• 2. New Frontier Data

Global Hemp CBD:

$22B by 20224

• 3. Grand View Research
• 4. Brightfield Group

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• 5. Cowen

U.S. CBD Market::

$16B by 20255

Gr Growin ing Par artners

Unmatched Nort rth Ameri rica Greenhouse Ass ssets

Ca Canada: De Delta, BC BC

2 Faci acilit itie ies 3.7 M M sq.

• q. ft
• ft. (85

(85 ac acres) s)

U.S .S.: Wes est t Texas

4 4 Faci acilities s - Veg egetables

5.7 .7 M M sq.

• q. ft.
• ft. (13

(130 ac acres)

9.4 M sq. ft. (215 acres) Owned Ass ssets

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Can annabis is JV JV 1.1 M sq. ft (25 acres)

Ca Canada: De Delta, BC BC

50% % Own Ownership ip of

• f JV

JV

Mexico: 1.7 1.7+ M sq.

• sq. ft
• ft. (40

(40+ ac acres) Ontario: 3.0 3.0 M sq.

• sq. ft.
• ft. (70

(70 ac acres) BC: BC: 3.0 3.0 M sq.

• sq. ft.
• ft. (70

(70 ac acres)

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750 years

• f combined master grower

experience from around the world

Cannabis and hemp are agricultural products like any other

Le Leaders in in Hig igh-Tech, Lo Low-Cost Vert rtic icall lly In Integrated Greenhouse Growin ing

Decades of experience as a

vertically integrated grower/distributor

30 30-year

history developing and operating mega-scale greenhouses

Exp xperts

in n agric agricult ltural l pr prod

• duct safety

Leaders

in n crop

• p ma

management regi egistratio ions in n Nort North Am Americ ica

Proven

track record as a low-cost operator

Existing operations with experienced management and skilled labor force enable faster ramp to profitability Existing facilities require lower cap ex and allow faster time to market compared to new builds Extensive in-house facilities development and conversion expertise Proven operating systems and decades of site- specific experience allow for more effective climate management, providing higher yields

Fast t Mover Advantage: Abil ility ty to Rapidly Transiti tion to New Crops with ith Lower Ris isk

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Canada

On Track to be One of the Largest Vertically Integrated Producers

Del Delta, , BC BC

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3.7 M sq. ft.

conservative projected yield of

255,000 kg 1.1 M sq. ft.

conservative projected yield of

75,000 kg

PSF: Village Farms’ 50%-Owned JV

Pure Sunfarms has the potential to address a substantial portion of forecasted Canadian demand

Ca Canada: : On Track to be One of f th the La Largest Vert rtic icall lly In Integrated Producers

PSF has options on D1 & D2 (Owned by Village Farms)

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▪

Appointed President and CEO: Mandesh Dosanjh

▪

Joined from LCBO: SVP, Supply Chain & Wholesale

▪

Developed/managed LCBO’s supply chain/wholesale strategy for adult-use cannabis

▪

Selected to supply Ontario Cannabis Store – in discussions for supply agreements with other gov’t distributors/private retailers

▪

Strategic supply arrangement with one of Canada’s largest

• nline medical cannabis platforms

▪

Developing product and brand strategy

▪

Extraction capabilities in place by mid-2019

▪

Wholesale distribution agreement with a Canadian LP for 40% of remainder of 2019 production

▪

Supply shortage: Realizing very favorable spot market pricing

▪

Strong demand from other Licensed Producers

Well ll pos

• sitioned for th

the evolu lution of

• f th

the Can anadia ian can annabis mar arket Capitalizing on the current wholesale

• pportunity to other Licensed Producers

Building a premier vertically integrated supplier with a leading brand and reputation Pure Sunfarms is building a reputation for quality, consistency, safety and reliability

Creating One of Canada’s Largest Vertically Integrated Cannabis Companies

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Configured for continuous weekly harvesting year round

Meticulous attention to the growing environment and systems, processing areas and production ramp up Growing system with automation proven in different crops to provide optimal efficiencies Industry-leading HVAC systems based on extensive climate management experience, with technically advanced data systems High-tech light deprivation/supplementation systems Fully automated, high-capacity nursery and 16 state-of-the-art flower rooms

Ca Capit ital l Effic ficie ient, Rapid id Co Conversio ion of f Exi xistin ing Produce Operatio ion

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Ingrained culture of high-quality, low-cost production built over decades Continuous year-round harvesting and processing allows for a consistent, experienced, skilled agricultural labor force

conservative target of

<$1.00/gram

Ability to be sustainably profitable in a commoditized market

GOAL: : Be Be th the Lo Low-Cost, Hig igh-Quali lity Ca Cannabis is Producer r in in Ca Canada

Greenhouse growing provides significant capital and operating cost efficiencies ▪ Lower energy needs ▪ Greater economies of scale ▪ Allows for greater scale

13 June 2017 Fi File Cult Cultiv ivatio ion Li License App Applic ication Oct 2017 March 2018 Ini nitia iate Cul Cultiv ivatio ion Li License Process Co Commence Co Conversio ion of

• f

1.1 M M sq. ft ft. Sept 2017

✓

Ob Obtain in Cul Cultiv ivatio ion Li License Co Comple lete Co Conversion

• f
• f Quad

uadrant 1 (27 (275,000 sq.

• q. ft

ft.) April 2018 Co Commence Co Commercia ial- Sc Scale le Prod

• ductio

ion Commence Sal Sales (Ot (Other LP LPs) May 2018 July 2018

Rapid id Transit itio ion to Productio ion and Sa Sale le

Pure Sunfarms has consistently achieved key milestones on or ahead of schedule

Ob Obtain in Sel Selli ling Li License Sept 2018 Exp Expand Li Licensed Ar Area to

• 825,000

sq.

• q. ft

ft. Jan 2019 Co Comple lete Co Conversio ion Al All Gr Growin wing g Ar Area Exp Expand Li Licensed Gr Growin wing g Ar Area to

• 550,000 sq.
• q. ft

ft. Ob Obtain Processin ing Li License Sept 2018 Ob Obtain in Packagin ing Li License Jan 2019 Co Commence Sal Sales to

• Provin

incia ial l Bo Boar ards/Retail ilers Q2 2019 Co Comple lete Li Licensin ing g for

• r ALL

ALL GR GROWING ARE AREAS: : >1 >1 M M sq.

• q. ft

ft. March 2019

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Q2 2019 Q2 2019

825,000 sq. ft. 550,000 sq. ft. 275,000 sq. ft.

August 2018 April 2019

2019

46,000 – 52,000 kg

2020

75,000 kg

Tar argeted Annual Production

1.03 M sq. ft.

Gr Growin ing Area Ra Ramp Up

January 2019: 825,000 sq. ft.1 in production

✓ ✓

Entir ire Growin ing Area Wil ill l Be Be in in Productio ion in in Apri ril l 2019

Expect to reach run-rate annual production of

75,000 kg

Mid-2019

✓

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On track to achieve or exceed all production expectations/forecasts

Facility operating as intended – benefitting from 20 years of site-specific experience, existing

• perational/growing team and existing labor force

Production to date validating low-cost assumptions Nursery capable of supplying production double the size of the Delta 3 requirement Quality and consistency firmly in line with expectations Yield consistent with production targets

Productio ion Rampin ing Very ry Well ll at t Sc Scale le

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330,000 555,000 339,250 255,000 160,000 147,000 107,000 92,950 88,000 87,000 68,000 Pure Sunfarms

Pure Sunfarms expects to reach run-rate annual production of 75,000 kg mid-2019

Existing and Announced Future Capacity of Top 10 Public LPs by Funded Future Capacity

At March 13, 2019

Existing Capacity (kg) Future Capacity (kg)

On track to be a top-ten producer at full production Currently one of the largest production capacities Potential to be a top-three producer

Posit sitio ioned to be a Le Leadin ing La Large-Scale le Su Suppli lier r in in Ca Canada

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Pure Sunfarms generated positive net income for both Q4/18 (first full quarter of sales) and the full year

Pure Su Sunfarms Alr lready Co Contrib ibutin ing to Fina inancia ial l Resu sult lts

• 1. Brightfield Group.

$US (000s except per share data)

Q4 Full Year 2018 2017 2018 2017

Sales 38,787 36,864 150,000 158,406 Cost of Sales (36,367) (31,908) (140,282) (144,433) SG&A Expenses (3,622) (4,019) (14,108) (13,894) Net Income/Loss 270 (607) (5,145) 3,822 Net Income/Loss Per Share 0.01 (0.02) (0.11) 0.10 EBITDA(1) 1,484 2,591 2,878 7,363

Vill illage Far arms

Inc nclu ludin ing Prop

• por
• rtio

ionate Sh Share of

• f Pur

ure Su Sunfarms

Pure Su Sunfarms

Before VFF’s Proportionate Share

Q4 Full Year 2018 2018

3,606 3,794 (1,058) (1,190) (982) (2,612) 5,500 4,762 N/A N/A 1,722 222

measure in evaluating the performance of the Company. Consolidated EBITDA includes the Company’s 50% share of its joint venture Pure Sunfarms.

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U.S .S. & Beyond

Uniquely Positioned for Both Near-Term & Longer-Term Opportunities

For

• rt

t Da Davis is, Texas

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U.S. opportunities are significant One of the largest existing greenhouse footprints in U.S.: 5.7 5.7M sq sq. . ft.

• ft. of
• f exis

isting, g, state-of

• f-the-

art art, produce op

• perations in

in best growin ing clim climate in in U.S .S. (5, (5,000 ft.

• ft. ele

levation, most su sunli light in in US) S)

Form rmid idable le Pla latform to Ca Capit itali lize on U.S. .S. Opportunit itie ies

U.S. assets are INDEPENDENT of Canadian cannabis joint venture (100% owned by Village Farms) 20+ years of operating history and >600 employees Can be rapidly converted to hemp or cannabis (upon federal and state legalization) Will benefit from cannabis experience in Canada Extensive experience developing large-scale agricultural projects in U.S. and globally

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Aggressively pursuing both opportunities to become a vertically integrated leader in hemp-derived CBD with field and greenhouse cultivation on a national scale 20 2018 18 Hemp Farming Bill ill PASSED: Hemp Removed fr from Federal l Con

• ntrolle

led Su Substances Act an and Cult ltiv ivation of

• f Hemp Federally

ly Le Legali lized

Industrial Hemp: Cannabis plant with low THC content (<0.3% -- not psychoactive) Hemp-derived CBD increasingly popular to improve general health and wellness

Sig Signif ific icant Near-Term U.S. .S. Hemp Opportunit ity U.S. market for CBD is conservatively forecast to generate sales of

US$16B

by 20251

• 1. Cowen: Cowen’s Collective View of CBD, February 2019

Wide variety of potential large-market applications for hemp-derived CBD: pharmaceuticals, nutraceuticals,

• ils, topicals, beverages, bottled water, energy drinks,

beer, beauty, food (confections), vapor

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Village Farms already has established relationships with the leading “big box” retailers, and a reputation for quality, reliability and safety

Village Farms’ Hemp/CBD Advantage

Milli illions of dollars and countless

person hours invested in infrastructure and IT systems to consistently meet customers’ exacting standards

Decades of experience as a

vertically integrated supplier to North America’s top grocery and “big box” retailers

Exis xisting in-house

regulatory team with deep expertise and extensive experience with USDA and FDA

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Target to commence sales of branded CBD products for “big box” retailers in 2020 Fou

• undation for Vertical In

Integration: JV JV for Mult lti-State Outdoor Hemp Culti ltivation an and CBD Extr xtraction (65 (65%-owned by y Vill illage Far arms)

JV Partner: Jennings Group – experienced hemp farm

• perator

▪ 10th generation farmers: Deep knowledge of field agriculture across a vast array of crops ▪ Expertise with hemp plant and success applying their cultural and genetic expertise to improve CBD content and yield

Vil illa lage Fiel ields Hemp: : Anchored in in Rese search-Driv iven Cu Cult ltiv ivatio ion

• 1. Brightfield Group.

Extraction operations expected to in place by end of 2019 to begin to supply CBD oil on wholesale basis Field cultivation planned to commence Spring 2019 with 500 to 1,000 acres in production during 2019

▪ Canada: Pure Sunfarms is firmly on track to be one of the largest vertically integrated cannabis producers with the capability to be the low-cost, high-quality producer ▪ Unmatched platform with proven ability to move quickly into new high-value crops ▪ USA: Aggressively pursuing opportunities in hemp/CBD with field and greenhouse cultivation: JV for field hemp cultivation/extraction and own one of the largest greenhouse footprints (independent of Canadian JV) ▪ Well aligned management team – 19.9% owned by founder and CEO ▪ Compelling valuation on Canadian cannabis business alone – PLUS US/international hemp and cannabis

• pportunities PLUS underlying produce business

▪ Mexico: Strong existing partnerships/operations with large-scale growers to pursue cannabis opportunities

Uniq iquely ly Posit sitio ioned for r Mult ltip iple le La Large-Scale le Opportunit itie ies In Investment Su Summary ry

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31st ROTH Conference March 17-19, 2019

AN UNMATCHED PLATFORM FOR THE GLOBAL CANNABIS OPPORTUNITY