Investor Presentation TSX:TRST May 2019 NYSE: CTST Disclaimers - - PowerPoint PPT Presentation

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Investor Presentation TSX:TRST May 2019 NYSE: CTST Disclaimers - - PowerPoint PPT Presentation

Investor Presentation TSX:TRST May 2019 NYSE: CTST Disclaimers This presentation is for information only and shall not constitute an offer to buy, sell, issue or subscribe for, or the solicitation of an offer to buy, sell or issue, or subscribe


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Investor Presentation May 2019

TSX:TRST NYSE: CTST

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Forward-Looking Statement

Certain information contained in this presentation constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this presentation that are not statements of historical fact may be deemed to be forward-looking statements. Forward looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend" or the negative of these terms and similar expressions. Forward-looking statements in this presentation include, but are not limited to, statements with respect to accretive earnings, statements with respect to the funded production capacity which may not be achieved or realized within the time frames stated or at all, the anticipated size and or revenue associated with the adult consumer market in Canada and the global market for medical marijuana. Forward looking statements are based on certain assumptions regarding CannTrust, including expected growth, results of operations, performance, industry trends and growth opportunities. While CannTrust considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Recipients are cautioned not to place undue reliance on forward-looking statements contained herein. Forward-looking statements also necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favorable terms; the early stage of the cannabis industry in Canada generally, realization of funded production estimates, income tax and regulatory matters; the ability of CannTrust to implement its business strategies; competition; currency and interest rate fluctuations; the estimated size of the adult consumer market for cannabis in Canada, the estimated size of the global medical cannabis market and other risks. Recipients are cautioned that the foregoing risks are not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. To the extent any forward-looking statements in this presentation constitutes “future-oriented financial information” or “financial outlook information” (collectively, “FOFI”), such information has been prepared by CannTrust to provide reasonable estimates of potential sales and production growth, among other things. FOFI contained herein, has been prepared by management to provide an outlook of CannTrust’s activities and results, and such information may not be appropriate for other purposes. CannTrust believes that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgements, however actual results of

  • perations of CannTrust and the resulting financial results may vary from the amounts set forth herein. Any FOFI speaks only as of the date on which it is made and, except as may be required by applicable securities laws,

CannTrust disclaims any intent or obligation to update any FOFI, whether as a result of new information, future events or results or otherwise. Forward-looking statements contained in this presentation are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. CannTrust disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Factors that could cause anticipated

  • pportunities and actual results to differ materially include, but are not limited to, matters referred to above and elsewhere in CannTrust's public filings which are, or will be, available at www.sedar.com and at www.sec.gov.

Certain information contained in this presentation is based on management’s review of independent sources such as industry publications, surveys and forecasts that management believes to be reliable. CannTrust has not independently verified any of the information from third-party sources nor have it ascertained the validity or accuracy of the underlying economic assumptions relied upon therein. Statements as to the cannabis industry, CannTrust’s market position and CannTrust’s general expectations concerning the cannabis industry are based on market data currently available to CannTrust. Similarly, management believes that its internal research is reliable even though such research has not been verified by independent sources. While CannTrust is not aware of any misstatements regarding any industry or government data presented herein, the cannabis industry involves risks and uncertainties and is subject to change based on various factors.

Disclaimers

This presentation is for information only and shall not constitute an offer to buy, sell, issue or subscribe for, or the solicitation of an offer to buy, sell or issue, or subscribe for any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The information contained herein is subject to change without notice and is based on publicly available information, internally developed data and other sources. Where any opinion or belief is expressed in this presentation, it is based on the assumptions and limitations mentioned herein and is an expression of present opinion

  • r belief only. No warranties or representations can be made as to the origin, validity, accuracy, completeness, currency or reliability of the information. CannTrust Holdings Inc. (“CannTrust”) disclaims

and excludes all liability (to the extent permitted by law), for losses, claims, damages, demands, costs and expenses of whatever nature arising in any way out of or in connection with the information in this presentation, its accuracy, completeness or by reason of reliance by any person on any of it. This presentation should not be construed as legal, financial or tax advice to any individual, as each individual’s circumstances are different. Investors should consult with their own professional advisors regarding their particular circumstances.

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Our Mission and Vision

By connecting people to products and education, we are showing people around the world how cannabis can elevate their lives We provide an outstanding return to those who invest their time, money and ideas in

  • ur company

We will strive to become the global leader in providing innovative cannabis products Mission Vision

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 Founded by pharmacists in 2013, 19th license issued by Health

Canada

 One of Canada’s most successful and trusted cannabis brands  Standardized products that enable physicians to provide accurate

dosage to patients, similar to pharmaceuticals, and provide patients and consumers with a consistent experience

 State-of-the-art cultivation and processing facilities:

 Phase II 450,000 sq. ft. perpetual harvest greenhouse in Niagara, Ontario; 50,000kg in capacity in 2019  Phase III construction underway to add approximately 390,000

  • sq. ft. in capacity; 100,000kg total capacity in 2020

 Manufacturing center of excellence in Vaughan, Ontario producing 10,000+ finished goods a day

 Acquired 81 acres in British Columbia, as part of its previously

announced plan to acquire 200+ acres of outdoor cultivation land for extracts and future product innovation; 100,000kg to 200,000kg in capacity by end of 2020

 Rapidly building capacity and capability to expand into new

categories: adult use market, over-the-counter, natural healthcare, health & beauty and pet care

 Global reach through a series of partnerships and joint ventures

Company Highlights

CannTrust At A Glance

Leader in the Medical Market Portfolio of Leading Brands and Products

70,000+

Canadian patients

70%

Q1/18-Q1/19 Canadian patient growth

2,500+

Active physicians

#1 Market Share

In oil products Recreational Brands Medical Products

As of May 2019

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Trusted By Customers

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Winner of Seven Awards, Including

“Licensed Producer of the Year”

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History of Leadership Built on Medical Expertise

2013 2019

March 2018 “TRST” delists from the CSE and begins trading on the TSX March 2018 Acquires a 25% equity stake in Stenocare, a Danish cannabis grower and producer; later makes history with the first shipment to Denmark through Stenocare in September 2018 February 2019 Begins trading on the NYSE under the ticker “CTST” June 2018 Opens Niagara Perpetual Harvest Facility, a 450k

  • sq. ft. greenhouse facility

October 2018 Launches recreational cannabis brands: liiv, Xscape, Synr.g and Peak Leaf June 2014 Approved by Health Canada as a licensed producer of medical cannabis in Canada; the 19th license awarded by Health Canada March 2019 Closes first of several land purchases as part of plan for outdoor grow August 2013 CannTrust Inc. is incorporated in Ontario October 2018 Peter Aceto joins as CEO, with former CEO Eric Paul becoming Chairman of the Board and Special Advisor June 2014 Filed patent for BrewBudz, single-serve brewing pods August 2015 Approved by Health Canada to produce medical cannabis oil (launched in 2016)

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Sales Growth Translating to Gross Profit

Well-Positioned to be a Leader in Global Cannabis

Continuing Sales Growth

CAD $mm

High Production Ramp

In Kg

Continued Active Patient Growth

CAD $mm

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4 21 46 8 17 2016A 2017A 2018A Q1 2018 Q1 2019 1,000 2,839 16,212 1,749 9,424 2016A 2017A 2018A Q1 2018 Q1 2019 1 13 26 5 8 2016A 2017A 2018A Q1 2018 Q1 2019 10,000 37,000 58,000 40,000 68,000 2016A 2017A 2018A Q1 2018 Q1 2019

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Total Estimated Size: $100bn (2) Total Estimated Size: $50bn (2)

Global Medical & Recreational Legalization

Our Market Opportunity

Total Estimated Market Size by 2025: $150bn (2) Global Medical Market Global Recreational Market

 Existing expansion of medical legalization in

the United States, Europe, Latin America and Asia

 40+ countries have legalized cannabis in

some form

 Currently driven by dried flower sales  National recreational legalization in two

countries: Canada & Uruguay

 Countries expanding from medical to

recreational legalization

 Expansion driven by oils and extracts and

consumer packaged goods

Medical + Recreational Partially Legalized Medical + Recreational Legalized Partially Legalized Total Canadian Market Estimated Size:

$8bn (1)

(1) Source: New Frontier Data. (2) Source: Grand View Research.

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Goals for Further Success

Expand production capacity, while driving down cost Further develop extraction capabilities and invest in manufacturing and GMP facilities Invest in innovation and protect intellectual property Continue international expansion, including grow capabilities and distribution Solidify existing, and establish new strategic partnerships

Short- to medium-term Long-term 8

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Investment Highlights: What sets us apart Industry-Leading Research and Innovation

1 2 3 4 5

Strong Medical Leadership Premier Operating Capabilities Dynamic Partnerships and Distribution Experienced Management

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DRIED FLOWER OILS TOPICALS CAPSULES

  • 2. Strong Medical Leadership

1

Broad Range of Offerings Across Categories to Satisfy Patients’ Needs

#1 in Oils Product Innovation Curve 10

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 Network of physicians educating

Health Care Practitioners across Canada

 Online education modules  Over 100 patient support agents who

  • nboard, advise and assist patients

(as of April 2019)

 Step-by-step instructions from

patient documentation to registration to prescription and product / dosage selection support

 Same-day and free delivery options,

as well as telemedicine support for

  • ngoing patient growth and retention

Rapidly Growing Patient Base

  • 2. Strong Medical Leadership (Cont’d)

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1

Historical Patient Growth (’000 Patients)

AWARD-WINNING PATIENT SUPPORT

Serving as a trusted resource for the medical cannabis community

70,000 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Today

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Biosynthesis Perpetual Harvest Greenhouse Outdoor Grow

$2.00 per gram $0.15 per gram $0.005 per gram Approximate cost from seed to harvest CannTrust Niagara Facility

Indoor Grow (Best-in-class) 2019 2019-2020 2022-2024

$0.75 per gram CannTrust Plan Lower Cost

  • 1. Premier Operating Capabilities

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2

EVOLVING CULTIVATION CAPABILITIES

Moving towards optimal efficiency

200+ Acres Secured

Consistent first-mover driving low cost, while maintaining high-quality product

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  • 1. Premier Operating Capabilities (Cont’d)

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Previously Announced Annual Production Capacity (1)

Production Facility Size

450,000 sq. ft.(2) +390,000 sq. ft.(2) 840,000 sq. ft.(2) 119+ acres 200+ acres & 840,000 sq. ft.(2) 50,000 kg +50,000 kg 100,000 kg 200,000 to 300,000 kg

50,000 kg +17,000 kg +50,000 kg 200,000 to 300,000 kg

Current Niagara Facility (Phase I & II Completed) Phase III Niagara Expansion Completed Niagara Facility Estimated Future Production

(1) Subject to regulatory approval. (2) Square footage of perpetual greenhouse capacity.

+81 or more acres +100,000 to 200,000 kg Outdoor Grow

Timing

Current Q3 2020 Q3 2020 2020 2020+ 2019

100,000 kg +100,000 to 200,000 kg

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  • 1. Premier Operating Capabilities (Cont’d)

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450,000 sq. ft. Niagara Perpetual

Harvest Facility with an additional

390,000 sq. ft. perpetual harvest

facility expansion in progress with enhanced technology

 Higher yield per square foot compared

to traditional cultivation

 Using cogeneration equipment for

lower power costs and heat recovery

 Perpetual grow allows for maximum

efficiency of labor

 Free energy from natural sunlight

GREENHOUSE & OPERATIONAL CAPABILITIES

A low cost producer with scale

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$0.75

Cost per gram

100,000Kg

Target 2020 annual greenhouse grow capacity through expansion

225g

Annual cannabis yield per sq. ft.

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  • 1. Premier Operating Capabilities (Cont’d)

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OUTDOOR GROW EXPANSION

Additional low cost production for extracts and other product formats

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Plans to acquire over 200 acres of outdoor cultivation land

 Recently purchased 81 acres of land in

British Columbia for outdoor grow

 Plan to have plants in the ground

and the first harvest in 2019 subject to Health Canada approval

 Currently fencing the property

and installing security systems and other infrastructure required for commercial production

 Primarily to be used to produce oil

products as well as future product innovations as Canadian regulations expand to include new product formats plus dried flower

200+acres

Land planned for purchase for outdoor grow

100,000

to

200,000Kg

Estimated additional annual capacity

$0.15

Approximate cost per gram

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  • 1. Premier Operating Capabilities (Cont’d)

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 Multihead weigher machinery to

quickly and accurately weigh product

 Capper and labeler technology  Premier extraction capabilities

STATE-OF-THE-ART TECHNOLOGY

 Automated trimming for rapid

production

 10,000+/day of finished goods

units for the medical and recreational market

EFFICIENT PROCESSING FOR RAPID OUTPUT

 Operating expertise and

technology that enables efficient encapsulation

 Hard shell vegan capsules with

banding technology

BEST-IN-CLASS OPERATING EXPERTISE

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  • 3. Industry-Leading Research and Innovation

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PUSHING THE BOUNDARIES OF SCIENCE AND TECHNOLOGY

Unlocking and protecting value through R&D and IP protection

  • Dr. Ilana Platt

Innovation and Global Regulatory

  • Post-doctoral fellowship at Harvard University
  • Ph.D. at University of Toronto
  • Dr. Jordan Silver

Product Development Specialist

  • Ph.D. at University of Toronto
  • Dr. Soheila Honari

Product Development Specialist

  • Ph.D. at Mashhad University
  • Pharm.D. at Tehran University

Innovation and patentable IP

 Higher cannabinoid bioavailability technologies leading to more effective dosing and higher

margins

 Nano-emulsion  Colorless, tasteless and odorless use for beverages and other products  Patent application has been filed in the U.S.  Self Nano-emulsifying Drug Delivery System “SNEDDS”  Patent application has been filed in the U.S.  Narrow range in particle size leads to predictable effects  Genetic sequencing  Strains have been time stamped using block chain technology protecting our unique

strains which are being used for clinical trials

 Constant strain improvements due to proprietary strains including regular new phenotype

selection

 Has led to increased pest resistance and higher potency/yields  Some strains of THC above 30%

Highly Experienced R&D Staff

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 Patents issued in the U.S., Canada and

Australia

 Patent pending in China and

European Patent office

 Whole flower extract with:  Tea  Coffee  Hot Chocolate

  • 3. Industry-Leading Research and Innovation (Cont’d)

18 Cannabis Patents on Single-serve Beverage Pods for Keurig, Nespresso, Tassimo-type Brewers

Positioned for the Edibles & Medical Market in 2019 (1)

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INNOVATIVE & EXPANDING SUITE OF PRODUCTS

Building upon research and expertise to satisfy consumer demand

(1) Anticipated legalization by October 17, 2019.

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Vast Partnership Potential

 Beverages  Manufacturing  Pharmaceutical  Mass retail  Over-the-counter  Natural health products  Other consumer packaged goods  …and more

  • 4. Dynamic Partnerships and Distribution

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 Retail store partnership  Preferred status & shelf space in 200+ retail stores expected to open in

the next 18 months

 Global partnership to conduct clinical trials, and develop innovation

targeting the veterinary and retail channels

 Canadians spend ~$750mm annually on pharmaceuticals for their pets  Canadians own approximately 16mm cats and dogs, who have the same

endocannabinoid system as humans, allowing for similar absorption

 Canada’s largest generic pharmaceutical manufacturer and seventh largest

in the world

 Partnership to develop proprietary and novel dosage forms

DIVERSE PARTNERSHIPS ACROSS CLINICAL, RESEARCH AND RETAIL

Furthering our innovation and commercialization capabilities

 #1 Alcohol distributor in Canada  Exclusive route to market partnership with CannTrust  Route planning, sales tools, analytics and insights  Invested in CannTrust with options for additional investment

Medical Recreational 19

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Put your trust in CannTrust

 Provide products to Registered

Patients who typically suffer from one

  • r more chronic conditions

 Distribute to patients through:  Direct shipment  Delivery through Canada Post or

Purolator

 February 2018: launched guaranteed

same-day delivery service in the Greater Toronto area for Registered Patients

 Implemented a patient assistance

program, CannTrust Access™, which makes Registered Patients with household annual income of <$30,000 eligible for a 30% discount

Experienced with provincial boards and private retailers

  • 4. Dynamic Partnerships and Distribution (Cont’d)

4

National Access Cannabis preferred status and shelf space in 200+ retail stores expected to open in the next 18 months

Niagara and Vaughan facilities in close proximity to Toronto

MEDICAL RECREATIONAL

9 Provincial Supply Agreements

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  • 5. Experienced Management

5

Chief Financial Officer

Greg Guyatt Andrea Kirk

VP, Quality

Jeffrey Zietlow

VP, Innovation & Product Commercialization

PeterAceto

Chief Executive Officer

Rob Schenkel

VP, Information Technology

Brady Green

VP, Cultivation

Michael Camplin

VP, Global Asset Management & Expansion

Len Walt

Chief Medical Officer

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Ian Abramowitz

SVP, Global Investments & Partnerships

Joel Friedman

VP, Finance VP, Global Investments & Partnerships

Adam Jerusalim Chris Lucky

VP, Supply Chain & Manufacturing

  • Dr. Ilana Platt

VP, Innovation & Global Regulatory

Bernard Yeung

SVP, Business Development & Marketing

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Opportunities for Substantial Growth

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CONTINUE EXPANSION

into adult-use recreational markets by targeting specific consumer segments

3 LEVERAGE

existing medical platform to extend leadership into global medical markets

1 DEVELOP

innovative and efficacious products through science and technology to elevate patient and consumer lives

2

GLOBAL GROWTH DRIVERS

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  • 1. Establishing Global Footholds (Cont’d)

 Access to Asian markets due to proximity and

relations with Australia

 19.8% ownership stake  ROFR on offtake for significant supply of low cost

product

Benefits to CannTrust

 Australian cannabis company focusing on low-cost,

high quality, medical production developing complete vertical integration with a similar business model

 Developing 1.7mm sq. ft. of low cost greenhouse utilizing optimal

growing climate

 One of the first Australian cannabis companies to be awarded

all medical cannabis licenses

1

 Danish company that imports and markets medical

cannabis products via pharmacies and hospitals

 Completed Europe’s first cannabis IPO on October 26, 2018  First mover - received approvals from Danish Medicines Agency  Currently distributing oils and capsules through pharmacies and

hospitals

 Access to European Union markets  19% ownership stake  Stenocare is vertically integrated, providing

benefit as a standalone investment

 Fully licensed in Denmark for operations and

sales

Benefits to CannTrust Company Overview Company Overview

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Pet Care products CBD sports drinks for athletic recovery Sublingual strips & sprays

  • 2. Develop Innovative and Efficacious Products

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EXPANDING SUITE OF PRODUCTS BACKED BY CUTTING-EDGE R&D…

Cannabis-infused flavored coolers / sparkling beverages Medical / health & wellness products

…WELL-POSITIONED IN VARIOUS VERTICALS ACROSS CANNABIS

Medical Over-the-counter Natural Healthcare Health & Beauty Recreational Pet Care

Topicals and patches Confectionery Vapes

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With strains like Flix ’N Chill carefully curated for specific occasions,

Xscape takes the guesswork out of choosing which product is right for

you.

Peak Leaf aims to show consumers that cannabis can be a great

complement to an active & healthy lifestyle. By selecting strains connected to nature, we aim to bring out the best in people.

  • 3. Continue Expansion Into Adult-Use Recreational Markets

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We’ll turn liiv into the ritual by owning the instant before everyday moments to make them even better, together. Because when the daily grind gets the best of us, liiv is here to remind you to #ButFirstLiiv.

Synr.g enhances your social times. From your dinner party to a night

  • ut or just connecting with friends, these expertly crafted strains have

distinct and enticing flavors. 25

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Why CannTrust Will Win

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INTELLECTUAL PROPERTY FOR GLOBAL MARKET LEADERSHIP FIRST-TO- MARKET PRODUCT DEVELOPMENT & INNOVATION GLOBAL MEDICAL LEADERSHIP: AN EXTENSION OF OUR CANADIAN ACHIEVEMENT EXPANSION INTO CONSUMER RELEVANT PRODUCT CATEGORIES

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