Corporate Presentation April 2017 CSE: CRZ | OTCQB: CNNRF - - PowerPoint PPT Presentation

Corporate Presentation

April 2017

CSE: CRZ | OTCQB: CNNRF

Forward-Looking Statements

Certain statements or information contained in this presentation constitute “forward-looking statements” within the meaning of that phrase under applicable Canadian securities laws. Forward-looking statements are not statements of historical fact . They involve management’s internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, investment opportunities, future expenditures, plans for and results of investments, portfolio results, business prospects and

• pportunities. Although management believes the expectations reflected in the forward-looking statements are reasonable, it cannot

guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies which could cause the company’s actual results, and those of its various investments, to differ materially from those expressed or implied in any forward-looking statements made by,

• r on behalf of, the company. No assurance can be given that these expectations will prove to be correct and such forward-looking

statements should not be unduly relied upon.

An Unparalleled Global Opportunity

Legal or Moving Towards Legal Cannabis Use

GLOBAL CANNABIS REFORM

▶ $150 Billion Global Market in 2016

(source: Viridian Capital Advisors)

▶ U.S. cannabis market forecast to hit $50 Billion by 2026, a 24% CAGR over the next 10 years

(source: Cowen & Co.)

Source: Consolidated at http://www.rethinkpot.org/worldwide-cannabis-legalization

CannaRoyalty at a Glance

▶ Founded: February 2015 ▶ Head Office: Ottawa, Canada ▶ U.S. Office: Irvine, CA ▶ First Trade Date: December 8, 2016 ▶ Ticker Symbols: CSE: CRZ OTCQB: CNNRF ▶ Shares O/S: 41.7 million (basic) ▶ Total financings to-date: $33 million

Strategic Capital + Functional Expertise to Support a Diversified Portfolio of Cannabis Holdings

TOTAL HOLDINGS

25

ROYALTY AGREEMENTS EQUITY INVESTMENTS LICENSING DEALS CONVERTIBLE DEBENTURES

7 10 4 2

The Cannabis Market Challenge

A UNIQUE MIX OF OBSTACLES FACE ENTREPRENEURS SEEKING TO COMMERCIALIZE PRODUCTS IN THIS SPACE

GROWTH CAPITAL

Banks and traditional institutions not open to investing in the complex emerging cannabis market.

LEGAL COMPLEXITY

Laws and regulations vary by state and country.

BRAND & MARKETING

Taking a product at start-up phase to a professionally branded, marketed asset takes expertise & resources.

SCALED PRODUCTION

Facilities to produce at large scale, that meet legal and code regulations, are required in each sales region.

DISTRIBUTION

Logistics requirements and regulations are complex and vary by jurisdiction.

OUR SOLUTION

An integrated platform designed for commercialization in 3 high-value segments of the global cannabis market

RESEARCH / IP CR BRANDS INFRASTRUCTURE

DEVELOPING INTELLECTUAL PROPERTY AND PATENTS IN CUTTING-EDGE SCIENCE, TARGETING HEALTH AND WELLNESS APPLICATIONS

RESEARCH / IP

ANANDIA LABS

CANADIAN LEADER IN CANNABIS TESTING, EXTRACTION AND GENETICS ▶ Laboratory facility exclusively focused on cannabis analytical testing ▶ Extensive Genetics IP portfolio ▶ Health Canada Dealers License, which allows:

▶ Extraction, research and product development beyond what current ACMPR regulations allow for Licenced Producers ▶ Global import and export of cannabis

CannaRoyalty Relationship: 20% Equity Interest

RESEARCH / IP

BODHI RESEARCH

RESEARCH TRIALS EXPLORING THE USE OF CANNABIS IN THE TREATMENT OF CONCUSSIONS AND POST-CONCUSSIVE SYNDROME ▶ Led by foremost expert in concussions, Dr. Neilank Jha ▶ Observational trials commenced Fall 2016, patent pending on proprietary formulation CannaRoyalty Relationship: 10% Equity Interest, with option to increase to 20%

RESEARCH / IP

CR BRANDS

A PREMIUM POSITONED STABLE OF CONSUMER BRANDS IN MEDICAL, WELLNESS AND ANIMAL HEALTH

GREENROCK BOTANICALS

VAPE PENS AND CARTRIDGES EMPHASIZING EASE OF USE, TOP QUALITY, AND RELIABLE PERFORMANCE ▶ Launched in California Market ▶ White-label in Arizona ▶ Designed specifically for cannabis extracts to deliver consistent experience ▶ Manufactured using premium componentry including glass, steel and ceramic atomizer CannaRoyalty Relationship: 100% Equity Interest in DreamCatcher Labs

IN DISTRIBUTION

VAPING IS ONE OF THE FASTEST GROWING SEGMENTS OF THE CANNABIS MARKET

2016 State of Cannabis Data Report https://www.eaze.com/blog/posts/eaze-insights-2016-cannabis-data-report

ACHELOIS (DERMALEAF SKINCARE)

UNIQUE, PROPRIETARY FORMULATION COMBINING FIBROBLAST WITH CANNABIS ▶ Launched in California and Puerto Rico Markets ▶ Burn Therapy, Skin Repair, and Anti-Wrinkle formulations CannaRoyalty Relationship: 70% Equity Interest

IN DISTRIBUTION

HUMAN SKIN CONTAINS A NETWORK OF CANNABINOID (CBD2) RECEPTORS THAT ARE TARGETED BY TOPICALS

SOUL SUGAR KITCHEN

AWARD-WINNING, GOURMET QUALITY HAND CRAFTED CANNABIS EDIBLES ▶ Launched in California ▶ Peanut Butter Cups, Hand-formed Truffles, Snack Mixes CannaRoyalty Relationship: 100% Equity Interest

IN DISTRIBUTION

2015-2016 COLORADO SALES DATA SHOWS THE EDIBLES CATEGORY SURGING UP BY MORE THAN 50% AS THE MARKET EVOLVES

https://mjbizdaily.com/chart-of-the-week-sales-of-marijuana-concentrates-edibles-surging-in-colorado/

RESOLVE DIGITAL HEALTH (BREEZE)

TRULY SMART METERED-DOSE INHALER FOR MEDICAL CANNABIS DELIVERY ▶ Tracks medication, connects to easy-to-use imbedded app ▶ Uses Smartpod system to load product cleanly and easily ▶ Pods geared for specific ailments: relief, sleep, calm, anti-inflammatory, control, energy, appetite CannaRoyalty Relationship: 27.2% Equity Stake in Parent Company Resolve Digital Health Inc.

EQUITY

$7.1 MILLION = VALUE OF 27.2% EQUITY STAKE BASED ON RESOLVE'S MOST RECENT FINANCING PRICE

NUTRAE LLC

MüV CANNABIS PATCHES

TRANSDERMAL PATCH – TIME RELEASE DELIVERY OF MEDICAL CANNABIS ▶ Discreet, dosage-controlled and smoke-free delivery of cannabis, in THC, CBD and 1:1 Blended options ▶ Part of a full family of products – topicals, concentrates, vaping, tinctures, oral spray, and more CannaRoyalty Relationship:

i) Revenue royalty of 3.5% on global sale of all NuTrae products ii) Right to License in Canada, Puerto Rico, California, Nevada, Massachusetts, Washington, Oregon

LICENSED

TRANSDERMAL PATCH DELIVERY OF PHARMACEUTICALS IN 2016 WAS A $7 BILLION MARKET.

http://www.prnewswire.com/news-releases/kalorama-transdermal-patch-market-grows-to-7-billion-300201293.html

NUTRAE LLC

MüV CANNABIS INHALER

METERED-DOSE INHALER FOR MEDICAL CANNABIS DELIVERY ▶ Discreet, dosage-controlled and smoke-free delivery of cannabis, in THC, CBD and 1:1 Blended options. ▶ Part of a full family of products – topicals, concentrates, vaping, tinctures, oral spray, and more. ▶ CannaRoyalty Relationship:

i) Revenue royalty of 3.5% on global sale of all NuTrae products ii) Right to License in Canada, Puerto Rico, California, Nevada, Massachusetts, Washington, Oregon

LICENSED

INHALERS OFFER DOCTORS AN IDEAL SMOKE-FREE ROUTE FOR PRESCRIBING DOSED MEDICAL CANNABIS

INDUSTRY INFRASTRUCTURE BUILT TO SUPPORT AND ACCELERATE THE COMMERCIALIZATION OF CANNAROYALTY ASSETS

INFRASTRUCTURE

DREAMCATCHER LABS

INDUSTRIAL FILLING & PACKAGING SYSTEMS ▶ Manufactures and produces GreenRock Botanicals brand

• Proprietary designs
• Launched in California and Arizona markets

▶ Industrial-scale filling & packaging systems

• 1 large-scale industrial auto-filling machine capable of filling up

to 1 million cartridges per month

• 2 small mobile industrial auto-filling machines capable of filling

up to 100,000 cartridges per month CannaRoyalty Relationship: 100% Equity Stake

INFRASTRUCTURE

MASS PRODUCTION CAPACITY OF MORE THAN 1 MILLION CARTRIDGES PER MONTH

WAGNER DIMAS

MANUFACTURING IP THAT ENABLES CONSISTENT, HIGH QUALITY PRODUCTION AT SCALE ▶ Strong launch in California market ▶ 8 co-packing (private label) clients in California ▶ Licenses secured in Nevada, Colorado ▶ Produces pre-rolled smoke-ready format using an industry-leading, innovative machine-rolled process CannaRoyalty Relationship: 20% Equity PRE-ROLLS CURRENTLY REPRESENT 14% OF THE OVERALL $6.7 BILLION U.S. CANNABIS MARKET

$5.7B

$1B 2016 Marijuana Business Factbook

INFRASTRUCTURE

APHRIA INC.

ROYALTY ON REVENUES OF CANNAROYALTY PRODUCTS IN CANADA ▶ Exclusive right to commercialize CR Brands products, including:

• Cartridges
• Softgels
• Transdermal patches
• Edibles
• Pre-rolls
• Sensuals

CannaRoyalty Relationship: 5% gross revenue royalty on CR Brands products for Canadian market; 5 year term from date of first sale

INFRASTRUCTURE

LEADING CANADIAN LP WITH PROVEN DISTRIBUTION EXPERTISE WELL POSITIONED FOR COMING FULL LEGALIZATION IN CANADA

NATURAL VENTURES

PUERTO RICO CULTIVATION, MANUFACTURING AND DISTRIBUTION ▶ Holds PR market’s largest cannabis licenses ▶ 100,000 SF cultivation facility ▶ 30,000 SF manufacturing facility ▶ Product Licensing Revenue = 10% Royalty on CR Brands CannaRoyalty Relationship: 2.5% Net Income Royalty for 10 years, and 10% Licensing Royalty on Revenue from sale of CR Brands products

INFRASTRUCTURE

WITH 100,000 ESTIMATED PATIENTS, THE PUERTO RICO MARKET IS COMPARABLE IN SIZE TO COLORADO’S

http://www.thecannabist.co/2016/08/02/puerto-rico-medical-marijuana-market/59550/

RICH EXTRACTS LLC

AWARD-WINNING MANUFACTURER AND DISTRIBUTOR OF EXTRACTS ▶ Largest lab and extract production facility in Oregon

• Extractor units capable of producing 60,000 grams per month

▶ Product line includes:

• Distillates
• Shatter
• Concentrates

CannaRoyalty Relationship: 30% Royalty on Gross Revenues in perpetuity

INFRASTRUCTURE

OREGON’S LARGEST PROCESSING FACILITY WITH CAPACITY TO PRODUCE IN EXCESS OF 60,000 GRAMS PER MONTH

CASCADIA HOLDINGS

REAL ESTATE HOLDINGS, TURN-KEY DESIGNED & EQUIPPED FOR LICENSED CANNABIS TENANTS (wholly owned subsidiary of AltoTerra Capital) ▶ American Nutraceutical building (9,000 SF)

• Permit granted for full scale extraction and processing

▶ Aroma Essential Oil Extractions building

• 9,000 SF of leasable space upon completion

▶ Koda Distribution

• Sales team led by former Seattle Seahawk Hillary Butler
• Relationships with over 200 dispensaries

CannaRoyalty Relationship: 30% Royalty on Gross Revenues in perpetuity

INFRASTRUCTURE

ONE OF WASHINGTON’S LARGEST NETWORK OF PRODUCTION FACILITIES

ALTMED ENTERPRISES LLC

MANUFACTURE AND DISTRIBUTION OF MEDICAL CANNABIS PRODUCTS CannaRoyalty Relationship: 8.2% Equity Interest

• Invested US$1.5 million @ US$10 million valuation (04/15)
• Post-money valuation of US$32 million (3rd party financing 08/15)
• Founded by Principals of MedImmune (acquired by Astra Zeneca)

▶ NuTrae LLC (MüV products)

• Delivery systems, including: transdermal patch, metered-dose inhaler, vape pens
• First products on market Q4 2016
• Distribution in place in Arizona, pending in Colorado

▶ AltMed Arizona

• AZ: 90% interest in 34,000 square foot, indoor licensed cultivation and extraction facility,

expansion planned for over 120,000 square feet of greenhouse space on 6 acres of owned land

• CO: 10% interest in a company with real estate and agriculture holdings focused on

cannabis sector ▶ AltMed Florida

• Planned Florida cultivation, dispensary, laboratory, extract facility

INFRASTRUCTURE

RIVER WELLNESS & DISTRIBUTION

LEADING DISTRIBUTION COMPANY IN CALIFORNIA MARKET ▶ Largest permitted distributor in California based on revenue and market reach

• Strong expected CAGR in excess of California market growth rates
• Currently selling into 400+ dispensaries

▶ US$15mm minimum purchase agreement of CR Brands products for CA market CannaRoyalty Relationship: 2.25% – 1.75% Revenue Royalty until end of 2024, preferred product distribution relationship

INFRASTRUCTURE

THE CANNABIS MARKET IN CALIFORNIA IS ESTIMATED TO BE MORE THAN $2.75 BILLION

http://www.medicalmarijuanainc.com/californias-legal-marijuana-market-worth-6-46b-2020-report-projects/

(closing expected April 2017)

Diversity of Holdings across North America

Legal Medical & Adult Recreational Use Legal Medical Use CannaRoyalty’s assets and holdings in California, Washington, Oregon, Arizona, Canada, Puerto Rico CANNABIS LEGALIZATION*

*As mandated by 2016 U.S. Election Day results.

Puerto Rico

Assets & Holdings

ROYALTY AGREEMENTS

Cascadia Holdings (Washington) – 30% of revenue in perpetuity Rich Extracts (Oregon) – 30% of revenue in perpetuity River Wellness (California) – 2.25% revenue royalty until capital investment recovered; 1.75% for balance of 8 year term (subject to closing) Aphria (Canada) – 5% of gross sales of all CannaRoyalty licensed products in Canada for 5 years NuTrae (MüV products) – 3.5% for 10 years Natural Ventures (Puerto Rico) – 2.5% net income royalty for 10 years from first commercial sales Three Leaf Holdings (North America) – 1.5% for 2 years

EQUITY INTERESTS (CONTROLLED)

DreamCatcher Labs – 100% Electric Medialand – 100% Achelois (DermaLeaf Skin Care) – 70%

PROPRIETARY BRANDS

GreenRock Botanicals DermaLeaf Skin Care Soul Sugar Kitchen Freya Intimacy Oil Best Buds Animal Health

OUT-LICENSING AGREEMENTS

Soul Sugar Kitchen – CA, WA

IN-LICENSING AGREEMENTS

Absolute Extracts – WA, Canada Care by Design – WA, Canada MüV – Canada, Puerto Rico, WA, OR, CA, NV, MA

EQUITY INTERESTS - 20% to 50%

Anandia Labs – 20% Bodhi Research – 10% (with option to increase to 20%) Wagner Dimas – 20% Resolve Digital Health – 27% Mobile Medicine – 50% JV

EQUITY INTERESTS < 20%

Alternative Medical Enterprises – 8.2% Eureka Management Services – 6%

SECURED, CONVERTIBLE LOANS

Eureka Management Services – (convertible to additional 10% equity stake) BAS Research – (convertible at 20% discount to Series A financing)

41.7mm SHARES OUTSTANDING

▶

3.25mm incentive RSUs and options issued

▶

918,993 warrants, exercisable at $1.50/share

▶

175,140 warrants, exercisable at $2/share

▶

2.65mm warrants, exercisable at $4.50/share

▶

$1.5mm convertible debt with Aphria Inc. (convertible at $2/share) 50.4mm FULLY DILUTED SHARES

▶

Previous financings

▶

03/15: C$2mm @ C$0.50/share

▶

06/15: C$3mm @ C$0.75/share

▶

06/16: C$5mm @ C1.00/unit

▶

10/16 (RTO): C$5mmm at C$2.00/share

▶

C$15 million bought deal financing closed February 15, 2017 @ C$3.00/unit

▶

Insider ownership ~12% (all subject to Lock-up/CSE Escrow)

CSE: CRZ OTCQB: CNNRF

Capital Structure

Management Team

A forward-looking management team with financial markets expertise, clear strategic vision and strong science guidance – backed by real-world cannabis know-how.

Chief Executive Officer

16 years in healthcare, capital markets.

Chief Operating Officer

Co-Founder, Paramount Gold, 20+ years corporate strategist, financier.

Marc Lustig Greg Wilson Chief Financial Officer

Former CFO of CSC Canada.

Francois Perrault Chief Marketing Officer

Founder, Electric Medialand, 30 years in marketing, brand development.

Todd Marcotte President, CR Brands

22 years of Consumer Product Goods

• perational experience.

Dave Vautrin General Counsel

Broad experience with public listings and prospectus financing.

Afzal Hasan Andra Enescu Legal Counsel & Corporate Development

Board of Directors

• 30 years in pharmaceutical development
• Chairman, Novavax, Inc. (Nasdaq:NVAX)
• Co-Founder Medlmmune
• Dr. James F. Young, PhD

Marc Lustig Greg Wilson

• Founder and former CEO of Canopy

Growth Corp. (TSX: CGC)

• CEO of Nesta Holding Co.
• Director of Aurora Cannabis.

Chuck Rifici, CPA

• 35+ years in Canada/US pharmaceutical

industry

• CEO of Tribute Pharmaceuticals
• Former VP at Biovail Corporation

Rob Harris

Chief Executive Officer

16 years in healthcare, capital markets.

Chief Operating Officer

Co-Founder, Paramount Gold, 20+ years corporate strategist, financier.

Value Proposition

▶ Diversified platform of holdings in ‘High Value’ segments of cannabis market across

North America

▶ Strategic Capital, functional know-how and first mover advantage to drive maximum

returns

▶ Transitioning into period of Revenue Growth & Cash Flow driven by the consolidation

• f current assets & royalty streams, combined with product launches

▶ Focus on value creation and upside potential of individual investee companies ▶ Growing Pipeline with new royalty opportunities & asset acquisitions in key segments

& geographies