GLOBAL CANNABIS OPPORTUNITY 1 Forw rward Lo Lookin ing St - - PowerPoint PPT Presentation

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Investor Presentation January 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 for the year ended December 31, 2017 and the most recent management's discussion and analysis for the quarter ended September 30, 2018, which is 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 OTCQX: VFFIF C$6.76

MARKET CAPITALIZATION

~ C$322 M

(basic)

SHARES OUTSTANDING

47.6 M

(basic)

51.2 M

(diluted)

52-WEEK HIGH/LOW

C$9.50 C$3.98

MANAGEMENT & BOARD OWNERSHIP

~22%

3 LISTING SYMBOL

(As of January 28, 2019)

~ C$346 M

(diluted) Listed on the TSX since 2006 Very strong alignment of management and shareholders

Mark rket Facts

Application Submitted to List on

NASDAQ

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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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Gr Growin ing Par artners

Me Mexic ico:

• : 1.7+

+ M M sq.

• q. ft
• ft. (40

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

• q. ft
• ft. (70

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

• q. ft
• ft. (70

(70 acr acres)

Unmatched Nort rth Ameri rica Greenhouse Ass ssets

Ca Canada: De Delta, BC BC

3 Faci acilit itie ies 4.8 M M sq.

• q. ft
• ft. (110

(110 ac acres) s)

1 Cannabis (1.1 M sq. ft) 2 Vegetables (3.7 M sq. ft.)

U.S .S.: West t Texas

4 4 Faci acilities s - Veg egetables

5.7 M M sq.

• q. ft
• ft. (13

(130 ac acres)

10.5 M sq. ft. of technologically

advanced facilities (240 acres)

Owned Ass ssets

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750 years

• f combined master grower

experience from around the world

Cannabis is an agricultural product like any other

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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

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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

300,000 kg

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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 nearly half 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 legalization of adult-use cannabis

▪

In advanced discussions for supply agreements with provincial government distributors

▪

Developing product and brand strategy

▪

Experienced management team contributed by Village Farms

▪

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 Im Immedia iate Term: Capitalize on wholesale opportunity Ne Next St Step: Vertically integrated supplier with a leading brand and reputation Committed to 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

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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 in two different sizes for greater versatility

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

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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

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June 2017 Fi File Cult Cultiv ivatio ion Li License App Applic ication Oct 2017 March 2018 Init nitiate 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 Complete 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 Sel Selli ling Li License Sept 2018 Exp Expand Li Lice censed Prod’n Area to 825,000 sq.

• q. ft

ft. Ob Obtain Packagin ing Li License Ob Obtain in Processin ing Li License Jan 2019 Co Comple lete Co Conversio ion Al All Gr Growin wing g Ar Area Exp Expand Li Lice censed Prod’n Area to 550,000 sq.

• q. ft

ft. Q1 2019 Sept 2018 Q1 2019 Jan 2019 Co Commence Sal Sales to

• Provin

incia ial l Bo Boar ards/Retail ilers Q1 2019 Exp Expand Li Lice censed Prod’n Area to >1 >1 M M sq.

• q. ft

ft. Q1 2019

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

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

August 2018 Q1 2019

2019

46,000 – 52,000 kg

2020

75,000 kg

Tar argeted Ann Annual l Prod

• ductio

ion

1.1 M sq. ft.

• 1. Production in Quadrant 1 temporarily suspended from October to February for installation
• f supplemental lighting.

Tar argeted Prod

• ductio

ion Ar Area Ra Ramp Up January 2019: 825,000 sq. ft.1 in production

✓ ✓

Rapid id Ramp to La Large-Sc Scale le Co Commercia ial l Productio ion

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

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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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300,000 575,000 339,250 160,000 160,000 148,000 108,000 92,500 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 Jan 28/19

Existing Capacity (kg) Future Capacity (kg)

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

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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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U.S .S. & Beyond

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

For

• rt

t Da Davis is, Texas

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Significant U.S. opportunities are a free option 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 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 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 <0.3% THC (non-psychoactive) Hemp-derived CBD increasingly popular to improve general health and wellness Key input in vast array of consumer products

Sig Signif ific icant Near-Term U.S. .S. Hemp Opportunit ity U.S. market for hemp-derived CBD is forecast to grow to

US$22B

by 20221

• 1. Brightfield Group.

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Top 10 LPs

(planned 2020 production2)

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

37,500 kg

kg

50% of Pure Sunfarms production (1.1 M square feet)

~C$346 M ~C$9.23 ~C$24.93

average

~C$6,328 M

average

~253,840 kg

kg

average

• 1. Fully diluted. At Jan. 28, 2019.
• 2. ACB, ZENA, WEED, APHA, TGOD, TLRY, XLY, PURE, FLWR, OGI.

Pla lanned Production Market t Ca Cap1 Market t Ca Cap/Gram

• f
• f Pla

lanned Production

20

150,000 kg

kg

50% of Pure Sunfarms production (4.8 million square feet)

~C$346 M ~C$2.31

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

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▪ Canada: Pure Sunfarms is firmly on track to be one of the largest cannabis producers with 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: Own

• ne 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 underlying produce business PLUS US/international hemp and cannabis opportunities ▪ 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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Investor Presentation January 2019

AN UNMATCHED PLATFORM FOR THE GLOBAL CANNABIS OPPORTUNITY