Corporate Overview beyond pioneering
Who We Are 1 st B ruining E rkelens • Five (5) unique cultivars have been 5 standardized and commercially accepted as raw material for the production of Active Pharmaceutical Ingredients (“API”); • Standardized placebo is also available for clinical and scientific trials; Standardized Cultivars DRO ge (= ‘dry’) • Patients, researchers, and 18 pharmaceutical partners in over a dozen countries and jurisdictions count on Bedrocan’s products; • Governments, corporates, and research CAN nabis institutions (NGOs, CROs, etc. ) favor the Jurisdictions served Bedrocan product suite • Established 1984 30 • Preferred provider to the Office of Medicinal Cannabis (“OMC”) in the Netherlands since 2003, ten (10) years prior to the establishment of the MMPR in Canada Years experience 2
Facts and Figures Operating Statistics Select Financial Statistics* 62% 40 Grow Room s worldwide Kgs Sold CAGR 2013-2017 53% Revenue CAGR 2013-2017 80% 18 Production Capacity CAGR Jurisdictions where Bedrocan products are 10 available Years Fiscal Growth * O rg a n ic C A G R s d e fin e d a s w ith o u t M & A a c tiv ity 3
Once upon a time… 4
Corporate Timeline Start – Program – Start – Expansion – GMP – Expansion Founding of Dutch Health Official start Start USA team Good Capital – Bedrocan as an Minister starts under the Dutch and start new manufacturing BI prepares for agricultural medicinal medicinal production practice (GMP) global expansion company cannabis cannabis facility in Czech and opening and large equity program program Republic new Dutch infusion facility 1984 1999 2015 2003 2017 2018 1992 2016 2017 2002 2014 Seeds – License – Canada – Australia – Outside First production New facility Start Bedrocan Bedrocan is Investment – of cannabis awarded 1 s t under Canada Brazil and plans Bedrocan seeds license to grow Health and for Australia accepts its first medicinal opening new become reality funds from an cannabis Dutch facility outside investor 5
Global Market for Cannabis and Market Environment Current Regulation Legality of Possession of Small Amounts of Cannabis • As of the date of this publication, medical use of cannabis is legal in Canada, Israel, Belgium*, Austria* Netherlands, Czech Republic, Denmark (4-year pilot project), Estonia, Spain, Greece, Portugal, Croatia, Mexico, Chile, Uruguay, Poland, Finland, Norway, Macedonia, Germany, Jamaica, Australia, Italy, Colombia, Slovakia, Lesotho and Switzerland; • Cannabis is classified as a Schedule IV drug in the UN Single Convention on Narcotic Drugs (the “Convention”); the Convention, however, allows independent nation states the choice of establishing cannabis for medical and scientific purposes. L e g a l o r E s s e n tia lly L e g a l Ille g a l Ille g a l b u t d e c rim in a liz e d N o in fo rm a tio n * O n ly w ith p re s c rip tio n o f s p e c ia lis t d o c to r Ille g a l b u t u n e n fo rc e d Regulatory Outlook Exemptions for Medical Use • The US does not show a sign of uniform legislation on the near term, although states are increasingly moving toward recreational use and robust medical use programs. The preponderance of states have legalized cannabis in some capacity, and only a single digit few still enforce misdemeanor possession laws on the books; • In Canada , legislation allowing for national adult use is set to take effect on October 17, 2018, with nationwide dispensaries and other distribution outlets set to open to an eager adult use population; • Experience in the US and Canada suggests that, once in place, medical cannabis laws are difficult to repeal, which may be due to a multitude of factors such as acceptance by the population at large, M e d ic a l U s e L a w s in P la c e increased tax revenues, lower healthcare spending, and other social S o u rc e s : U N O D C , D E A , F ro n tie r F in a n c ia ls G lo b a l L e g a l C a n n a b is R e p o rt. 6 and economic considerations.
The Dutch Model – The Office of Medicinal Cannabis (“OMC”) • Established 2000; • Part of the Dutch Health Ministry; • Responsible for production, distribution (export) and quality; • Mandator of Bedrocan Nederland (Dutch licensee of Bedrocan International); • Monopoly on trade of all raw cannabis (similar to production of poppies); • www.cannabisbureau.nl (EN pages too). 7
Regulatory and Commercial Landscape United States Canada Netherlands Europe N ine (9) states have passed federal legislation for S chedule 1 N arcotic in the C S A ; G overnm ent as counterparty creates partnership & S chedule 2 N arcotic in the C S A Federal Regulation / m edical cannabis consum ption (B I has lo n g M edical use legalized since 2002 / recreational use A dverse E xecutive branch & enforcem ent policy; legitim acy; stan d in g relatio n sh ip s w ith each jurisdiction); Enforcement Policy allow ed from O ctober 17 2018 N o n -co m p lian t w ith U N treaties S cale & interstate com m erce prohibited G ov’t to G ov’t (“ G 2G ”) supply chain; P ublic / P rivate partnerships F ull depository, w ire, treasury services by m ultiple F ull depository, w ire, treasury services by m ultiple F ull depository, w ire, treasury services by m ultiple Access to Banking / Lim ited and incongruent access (often at global investm ent and m erchant banks; global investm ent and m erchant banks; global investm ent and m erchant banks; Depository Services R evolving, project finance, and real estate facilities R evolving, project finance, and real estate facilities R evolving, project finance, and real estate facilities considerable prem ia) betw een / am ong the states available at com m ercial rates; available at com m ercial rates; available at com m ercial rates; N o adverse tax N o adverse tax N o adverse tax Tax Considerations §280E D eduction Lim itation A ccess to agricultural, biotech, and pharm a A ccess to agricultural, biotech, and pharm a A ccess to agricultural, biotech, and pharm a subsidies and grants subsidies and grants subsidies and grants + 118 L icen ses Issu ed – free m arket policy; P referred p ro vid er to O M C for fifteen (15) years; Lim ited licensing D isparate licensing regim es betw een / am ong Licensing strict regulations to prohibit diversion and to P ublic tender disbursed every 3-5 years; guarantee m inim um quality; S eparate tenders for m edical & recreational use to In d o o r C u ltivatio n ; 3+ year history of C O A s; states N o strict separation m edical/recreational be ratified in 2019 C h em ical p ro files sim ilar to B I C ultivars; Quality and S trict standardization as m edical cannabis view ed “C om passionate U se” N on-pharm aceutical regulation (A C M P R ) S trict S tandardization to G A C P and G M P standardization as a pharm aceutical product in E U ; (no standardization regulation) F or m edicinal and recreational use (N on-conform ing crops destroyed) Requirements G A C P an d G M P standardization Total Addressable 330 m illion* 750 m illion 37 m illion 17 m illion Market (Population) Total Addressable $50-55 billion(1) $ 4.3 – 7.5 billion (2) $1.5 – 3.0 billion(3) $100-125 billion(4) Market ($) (1 ) M a r iju a n a B u s in e s s D a ily E s tim a te d D e m a n d , le g a l a n d b la c k m a r k e t. (2 ) B N N B lo o m b e r g ; C a n a d a ’s le g a l c a n n a b is m a r k e t b y th e n u m b e r s (3 ) O p e n S o c ie ty F o u n d a tio n e s tim a te s > $ 4 0 0 m illio n in ta x r e c e ip ts b y D u tc h A u th o r itie s in 2 0 1 3 fr o m c o ffe e -s h o p s .. (4 ) In d u s tr y e s tim a te s b a s e d o n p o p u la tio n , g e o g r a p h y , a n d p r o p r ie ta r y m a r k e t r e s e a r c h . 8
Views on European Cannabis Market European cannabis market Select Forecast • Europe is destined to become the world’s largest medical cannabis market because the Continent will require fully registered cannabis medicines in its market, and will hold those medicines to pharmaceutical and GMP standards throughout. • Driven in large part by pharmacies and physicians, European cannabis agencies will enforce Good Manufacturing Practices (“GMP”) and public healthcare coverage policies that will ensure high standards from the cannabis industries. Only companies that are able to meet and maintain these high standards, will survive in the European cannabis industry. • Recreational cannabis is very unlikely to become widely regulated in Europe as it is in the US and Canada, as the compassionate use systems of the Western Hemisphere are unlikely to cross the ocean to Europe. Unique position Bedrocan is likely to become the key-cultivator because: • Nearly three decades of experience in cultivating top-quality medical cannabis in the most scrutinized government-to-government supply chain on the planet; • Assisted governments around the world in understanding the Dutch Framework of cannabis regulation, and seeks to export regulatory influence and commercial discipline in every new market it enters; • Acquired GMP certification for its whole cultivation process. 9
30 years in business 10
Global presence (Office or facility) Netherlands 1984 Czech Rep 2014 *Canada USA 2014 2015 *Brazil 2016 Australia 2016 Bedrocan current presence 11 *Jurisdiction subject to moratorium between Canopy and Bedrocan
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