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

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June 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 $16.72

MARKET CAPITALIZATION

CDN$823 M

(basic)

SHARES OUTSTANDING

49.2 M

(basic)

53.0 M

(diluted)

CDN$24.25 CDN$3.98

MANAGEMENT & BOARD OWNERSHIP

~21.5%

LISTING SYMBOL

(As of June 4, 2019)

US$610 M

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

Mark rket Facts US$18.10 US$2.93 $12.43

52-WEEK HIGH/LOW

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Canadian Legal Cannabis:

$4B+ in 20191

Global Hemp-Derived CBD:

$22B by 20222

US Legal Cannabis:

$25B by 20253

• 1. Deloitte 2. Brightfield Group 3. New Frontier Data

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Canadian cannabis JV already one of the largest producers in Canada and profitable Aggressively pursuing a consumer packaged goods strategy to capitalize on the hemp/CBD opportunity the U.S. Proven ability to quickly transition existing large-scale operations to new agricultural

• pportunities

Focused on near-term cash flow generation and rapid ramp to profitability

Leveraging decades of experience as a large-scale, low-cost, vertically integrated grower for nascent large market opportunities

Gr Growin ing Par artners

Vegetables

Unmatched Nort rth Ameri rican Greenhouse Asse ssets

Ca Canada: De Delta, BC BC

1 Faci acilit ity 2.6 M M sq.

• q. ft
• ft. (60

(60 ac acres) s)

U.S .S.: Wes est t Texas

4 4 Faci acilities s - Veg egetables

5.7 M M sq.

• q. ft
• ft. (13

(130 ac acres)

8.3 M sq. ft. (190 acres) Owned Ass ssets

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Can annabis is JV JV

(50% ownership)

2.2 M sq. ft. (50 acres)

Ca Canada: De Delta, BC BC

2 2 Faci acilities: s: Del Delta 2 2 & Del Delta 3 3 (f (form

• rmerly owned by Vil

Village Far arms) s)

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)

6

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, meeting the stringent specifications of North America’s top grocers

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

tr track recor

• rd as

as a a low-cos

• st op
• per

erator

• r

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

Pure Sunfarms: One of the Largest Vertically Integrated Cannabis Producers

Del Delta, , BC BC

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+2.6 M sq. ft.

conservative projected yield of

+180,000 kg 2.2 M sq. ft.

conservative projected yield of

150,000 kg

PSF: Village Farms’ 50%-Owned JV

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

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

PSF has option on D1 (owned by Village Farms) – expires Sept 2021

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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 agreements with a Canadian LP

▪

2019: 40% of production @ fixed price

▪

2020-22: 25% of production @ prevailing market price

▪

Supply shortage: Realizing very favorable spot market pricing

▪

Strong demand from other Licensed Producers

▪

Product is consistently meeting the high testing standards of Health Canada

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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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

12 June 2017 Fi File Cul Cultiv ivatio ion Li License App Application Oct 2017 March 2018 Init nitiate Cul Cultiv ivatio ion Li License Process Co Commence Co Conversio ion

• f
• f 1.1 M

M ft ft2 Sept 2017

✓

Ob Obtain in Cul Cultiv ivatio ion Li License Co Complete Co Conversio ion of

• f

Qua uadrant 1 (27 (275,000 ft2) April 2018 Co Commence Co Commercia ial- Sc Scale le Prod

• duction

Commence Sal Sales to

• Oth

Other LP LPs May 2018 July 2018

Delt lta 3: : Ra Rapid id Transit itio ion to Productio ion and Sa Sale le

Delta 3 firmly on track to reach full run rate annual production of 75,000 kg mid-2019

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

• 825,000 ft2

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 ft2

Sept 2018 Ob Obtain in Processin ing Li Licenses Jan 2019 Co Commence Sal Sales to

• Provin

incia ial l Bo Boar ards/Retailers Q2 2019 Co Comple lete Li Licensing for

• r ALL

ALL GR GROWING AREA: >1 >1 M M ft2 Mar 2019

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

May 2019 Apr 2019 ALL ALL GROWING ARE AREA IN N PRODUCT CTION

✓ ✓ ✓

Ob Obtain in Sale Sales “Packaging” Li License Q2 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

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

2019

46,000 – 52,000 kg

2020

95,000 kg

Tar argeted Annual Production

Delt lta 2: : Replic licatin ing th the Su Success of f Delt lta 3 to Double le Productio ion

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2021

150,000 kg

Conversion and ramp of Delta 2 will benefit from the significant learnings of Delta 3 De Delta 3: 3: 1.1 1.1 M sq sq. . ft ft

All ll 1.0 .03 M sq. . ft.

• ft. of
• f gr

growing g area in in prod’n Full ll run run-rate annual l prod’n: M Mid id-2019

De Delta 2: 2: 1.1 1.1 M sq sq. . ft. ft.

Fir irst harvest: M Mid id-2020 Full ll run run-rate annual l prod’n of

• f 75,0

,000 kg: g: Q4 2020

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150,000 555,000 339,250 255,000 200,000 160,000 150,000 99,000 92,950 80,000 73,000 Pure Sunfarms

Pure Sunfarms expects to reach run-rate annual production of 75,000 kg mid-2019 and run-rate annual production of 150,000 kg in Q4 2020

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

At June 4, 2019.

• 1. If Pure Sunfarms exercised its option on the 2.6 million sq. ft. Delta 1 facility currently owned by Village Farms.

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

330,0001

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Pure Sunfarms generated positive net income for Q4/18, full year 2018 and Q1 2019

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

$US (000s except per share data)

Q4 2018 Full Year 2018 Q1 2019

Sales 3,606 3,794 10,801 Cost of Sales (1,058) (1,190) (3,818) SG&A Expenses (982) (2,612) (999) Net Income 5,500 4,762 8,596 EBITDA1 1,722 222 6,449

Pure Su Sunfarms Fin Financia ial l Resu sults

Before VFF’s Proportionate Share

(1) EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by IFRS. Therefore, EBITDA may not be comparable to similar measures presented by other

• issuers. Management believes that EBITDA is a useful supplemental measure in evaluating the performance of the Company.

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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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Will collaborate with geneticists, academics and researchers to drive genetic advances and cultural practices to optimize plant traits and yields

Hemp/CBD: A A Sig Signif ific icant Near-Term Opportunit ity

Vertically Integrated Strategy to Capture Value Throughout Supply Chain

Outdoor Cultivation

Will initially sell hemp biomass and wholesale CBD oil ahead of product development to drive near-term cash flow

Greenhouse Cultivation On-site Extraction Centralized Extraction Product Development & Manufacturing

Targeting “Big Box” & Other Major Retailers and CPG Companies

• White-Labeled CBD Products
• Branded CBD Products

Projected U.S. CBD Market

$16B by 20251

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

La Large-Scale le Hemp Productio ion Potentia ial

Texas: 5. 5.7 M sq sq. . ft.

• ft. (13

(130 acr acres)

Per ermia ian Ba Basin (M (Monahans): >1 >1.3 M sq. . ft.

• ft. (3

(30 acr cres) Marfa (2 (2): ): >2 >2.5 M sq. . ft.

• ft. (6

(60 acr cres) Fort Da Davis: >1 >1.7 M sq. . ft.

• ft. (4

(40 acr cres)

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Outdoor Operatio ions Greenhouse Co Conversio ion Opportunit ity

Vill illage Fie Field lds Hemp: >8 >800 ac acres

Vir irginia S Sou

• uth Ca

Caroli lina No North Ca Carolin ina

Have commenced growing hemp outdoors and have commenced conversion of half of Permian Basin greenhouse

Village Fields Hemp Headquarters

Ark rkansas Vall alley Gr Green an and Go Gold Hemp: 12 120 0 acr acres

Col Colorado + + Evaluatin ing op

• pportunitie

ies for

• r oth
• ther loc

locations

Arkansas Valley Green and Gold Hemp Permian Basin Greenhouse

20 Dec 2018 Form

• rmatio

ion of

• f

Vi Villa lage Fi Field elds Hem Hemp Apr 2019 Pass assage of

• f 2018

Far arm Bil Bill Co Contract Ini nitia ial l Gr Growers Feb 2019

✓

Co Commence Ger ermination Co Commence Fi Field eld Plantin ing May 2019 Co Commence Harv Harvestin ing Es Establi lish Ex Extractio ion Cap Capabil ilit itie ies August 2019 Q4 2019

Outdoor Hemp: Rapid id Path to Ca Cash Flo low Generatio ion

Co Commence Sal Sales of

• f Hem

Hemp Bi Biom

• mass

Q4 2019 2020

✓ ✓ ✓

Apr 2019 Co Commence Sal Sales

• f
• f CBD

CBD Oi Oil Co Commence CBD CBD Prod

• duct

Man Manufacturin ing 2020

2020: Commence sales of white labeled and branded CBD products to “big box” retailers

Form

• rmatio

ion of

• f

Ark Arkansas Vall alley Gr Green and and Go Gold d Hem Hemp May 2019

✓

✓

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Cannabis cultivation uses the same growing system as hemp cultivation – Could rapidly transition to cannabis from hemp should cannabis be legalized at federal and state levels

5.7 .7M sq. . ft

• ft. of
• f exis

isting, g, state-of

• f-the-art, vegetable

le op

• perations in

in West Texas – th the best growin ing clim climate in in U.S .S. due to

• combin

ination of

• f hig

igh ele levation an and ab abundant su sunli light

Greenhouse Hemp Opport rtunit ity: : One of f th the La Largest Footp tprin ints in in U.S. .S.

U.S. greenhouse assets are INDEPENDENT of Canadian cannabis joint venture (100% owned by Village Farms) 20+ years of operating history and >600 employees Conversion and production ramp would benefit from cannabis experience in Canada Extensive experience developing and ramping large- scale greenhouse projects in U.S. and globally

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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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PLUS underlying produce business PLUS U.S./Mexico opportunities Comparative Value: 2020 Planned Production Capacity1

• 1. Annual run rate production capacity at end of 2020. 2. ACB, ZENA, WEED, APHA, TRST, TGOD, TLRY, HEXO, EMH, PURE. 3. Fully Diluted. At June 4, 2019. 4. If Pure Sunfarms exercised its
• ption on Village Farms’ Delta 1 facility (2.6 million sq. ft.), which would add an additional 90,000 kg of planned production annually (Village Farms’ 50% share of the targeted total production of Delta

1 of 180,000 kg), market cap/gram of planned production would be ~C$5.37.

Top 10 LPs2 (by planned 2020

production capacity)

~C$19.54

average

~C$5,172 M

average

~264,629 kg

kg

average

Pla lanned Production Ca Capacit ity Market t Ca Cap3 Market t Ca Cap/Gram of

• f

Pla lanned Production Ca Capacit ity

75,000 kg

kg

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50% of Pure Sunfarms’ production (2.2 M square feet)

~C$886 M ~C$11.82

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Co Compell llin ing Valu luatio ion on De-Ris isked Sc Scale le Up – Ca Canada Only ly

▪ 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 – 19.3% 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 Large-Scale le Opportunit itie ies In Investment Su Summary ry

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June 2019

AN UNMATCHED PLATFORM FOR THE GLOBAL CANNABIS OPPORTUNITY