PEI Cannabis - Annual Report 2020

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PEICMC What guides us

PEICMC Vision Statement

To be the preferred source of adult use cannabis.

PEICMC Mission Statement To provide customers with a retail experience that exceeds their expectations, foster an internal culture of engagement and wellness, and create value for all stakeholders. PEICMC Strategic Pillars Business Results: To become a key contributor to PEI’s general revenue through business excellence and the continuous improvement in operational effectiveness and efficiency. Customer Experience: To achieve and maintain high levels of customer satisfaction through sales channel accessibility, technical innovation, merchandising value, and high responsiveness to customer preferences. Corporate Citizenship: To be an excellent corporate citizen with high brand equity achieved through the promotion of responsible cannabis consumption, ongoing stakeholder engagement, and internal Corporate Social Responsibility campaigns.

People & Culture: To foster a high-performing, customer-focused culture of engaged employees through open communication, learning & development, safe work environments, and overall wellness.

PEICMC Corporate Values Teamwork

Always succeeding together. Having fun going the extra mile.

Passion

Accountability

Reliably delivering on our commitments.

Education Empathy

Continuously learning. Everyone is important.

PEI Cannabis Î.-P.-É. • 2019 Annual Report 3

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Table of contents

3 5 6 6 7 8 9 9 9 9

PEICMC - What Guides Us

Table of Contents

Message from the Minister

Message from the Chairman

Message from the CEO

Corporate Governance

Mandate of the PEI Cannabis Management Corporation Board

Accountability to Government and the Public

Appointment of Members, Chair, and Vice Chair of the Corporation

Audit Committee

10 12 13 14 14 17 20 23 26 27 28 28 28 28 29 30 32

Organizational Structure

Executive Summary

Sommaire

Strategic Review Of Operations

Strategic Goal 1 - Business Results

Strategic Goal 2 - Customer Experience

Strategic Goal 3 - Corporate Citizenship

Strategic Goal 4 - People & Culture

Featured Supplier - Canopy Growth Corporation

Retail Storefront Distribution

Additional Statistical Breakdown

Store By Store Net Sales Analysis

Dried Cannabis Equivalency Sales

Dried Flower Sales By Pack Size

Operating Expenses Analysis

Management’s Report

Financial Statements

PEI Cannabis Î.-P.-É. • 2019 Annual Report 5

Message from the Minister

The Honourable Antoinette Perry Lieutenant Governor of Prince Edward Island PO Box 2000 Charlottetown, PE C1A 7N8

May It Please Your Honour:

Pursuant to the PEI Cannabis Control Act and as Minister designate, it is my privilege to submit the 2nd Annual Report of the Prince Edward Island Cannabis Management Corporation.

Respectfully submitted,

Hon. Darlene Compton Minister of Finance Minister Responsible for the PEI Cannabis Management Corporation

Message from the Chairman

The Honourable Darlene Compton Minister of Finance Minister Responsible for the PEI Cannabis Management Corporation PO Box 2000 Charlottetown, PE C1A 7N8

Madam Minister:

In compliance with Section 15 of the PEI Cannabis Management Corporation Act , it is my honour to submit this 2nd Annual Report of the Prince Edward Island Cannabis Management Corporation covering the period of April 1, 2019 to March 31, 2020.

Respectfully submitted,

Quentin Bevan Chairman

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Message from the CEO

Mr. Quentin Bevan Chairman, PEI Cannabis Management Corporation 3 Garfield Street Charlottetown, PE C1A 6A4

Dear Mr. Bevan:

Through the fiscal year of April 1, 2019 to March 31, 2020, gross sales of the PEI Cannabis Management Corporation (PEICMC) totaled $16.3M, and its net profit was $653,401. We were pleased to generate this revenue for government, in addition to approximately $1M in excise tax revenues for the province as a result of our operations. Most importantly, the three public policy priorities that shaped the formulation of the PEICMC business strategy have proven to be a strong foundation to measure success in the Iong-term - keeping cannabis out of the hands of youth, educating Islanders on the health risks and regulations associated with cannabis use and eliminating the illicit cannabis market. For these accomplishments I wish to acknowledge the Board of Directors for their guidance and support, as well as the Executive Management Team for its important contributions towards these achievements. I also want to highlight the remarkable work done by all the PEI Cannabis staff who are central to our successes. With our stores being closed as of March 19, 2020 due to the COVID-19 pandemic, this will no doubt present unique challenges going forward. However, PEI Cannabis is confident in the measures that have been developed to ensure the health and safety of our employees and customers at such time the stores are opened to the public. As the PEI Cannabis Management Corporation enters into its third year of operation we look forward to achieving greater successes with our dedicated team and a sound business strategy in place.

Yours truly,

James C. MacLeod Acting Chief Executive Officer

PEI Cannabis Î.-P.-É. • 2019 Annual Report 7

Corporate Governance Corporate governance is the cumulative set of mechanisms, processes and relationships by which the corporation is controlled and operated. It defines the distribution of rights and responsibilities among different corporation stakeholders (e.g. government shareholder, CMC board members, senior managers, auditors, regulators, etc.) and details the decision making framework related to the pursuit of corporate and policy objectives.

PEI Cannabis Management Corporation Board Murray Murphy - Corporation Solicitor Nicole DesRoche - Member Lisa MacKinnon - Secretary Perry Gotell - Member Jamie MacLeod - Acting CEO Quentin Bevan - Chair Kim Griffin - Member, Vice Chair Susan Milligan - Member (missing from picture)

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Mandate of the PEI Cannabis Management Corporation Board The duties of the PEICMC Board are to:

• remain highly-engaged in PEICMC business affairs and evolving industry factors. • make well-informed decisions in good faith and in a way that is impartial, fair, and ethical; • manage, or, supervise the management of the PEICMC’s affairs including guiding policy decisions; • approve the PEICMC’s budget, business plan, annual report, and financial statements; • make, amend, or repeal bylaws; and • exercise any additional responsibilities as defined within the regulations.

Accountability to Government and the Public The PEICMC is held accountable to government and the general public through a range of measures including, but not limited to: • The PEICMC annual report which is tabled in the legislature and available to the public that includes comprehensive details on the PEICMC’s affairs and financial outcomes during the preceding year; • Annual audited statements by the auditor general, or, a qualified auditor appointed by the Board to be included in the annual report; • Public access to records under the Freedom of Information and Privacy Protection Act; and • Publicly-appointed board members. Appointment of Members, Chair, and Vice Chair of the Corporation The Lieutenant Governor in Council, through an order-in-council, appoints the members of the PEICMC board, establishes the honorariums, and designates the chair. The board collectively designates the vice-chair from among its members. Audit Committee The Audit Committee is elected annually and consists of three commission members in addition to the chairman and the CEO as ex-officio. The committee ensures the reliability and accuracy of the PEICMC’s financial statements, helps co-ordinate and improve internal control functions, and ensures the PEICMC adheres to sound corporate governance principles.

PEI Cannabis Î.-P.-É. • 2019 Annual Report 9

Organizational Structure

Hon. Darlene Compton

Minister Responsible

Quentin Bevan

Chair

Perry Gotell

Kim Griffin

Member

Member / Vice Chair

Susan Milligan

Nicole DesRoches

Member

James C. MacLeod

Lisa MacKinnon

Acting Chief Executive Officer

Administrative Assistant

James C. MacLeod

Zach Currie

Carl Adams

Director of Corporate Services*

Director, Cannabis Operations

Chief Financial Officer*

Shawn Alexander

David Stewart

Human Resources Manager*

Director, Purchasing and Distribution*

* Shared-services agreement with the PEI Liquor Control Commission (PEILCC).

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PEI Cannabis Î.-P.-É. • 2019 Annual Report 11

Executive Summary The Prince Edward Island Cannabis Management Corporation (PEICMC) is a crown corporation responsible for the administration of the PEI Cannabis Management Corporation Act and Regulations. The PEICMC operates under the branded name PEI Cannabis. A five-member Board of Commissioners appointed by the Lieutenant Governor in Council is responsible for the corporation’s activities, and the chairperson reports to the minister responsible for PEI Cannabis.

The mandate under the Cannabis Management Corporation Act has two primary purposes:

1. To establish the necessary framework for socially responsible management of the distribution and sale of cannabis and related products; and 2. To facilitate and promote the responsible consumption of cannabis and related products in Prince Edward Island. PEI Cannabis expects to become a major force in the provincial economy over the medium-to-long term, and during its second fiscal year it generated over $16M in total net receipts and captured approximately 40% of the illicit market. A three-year strategic plan, complemented by an annual business plan, is the key mechanism to ensure PEI Cannabis is meeting its strategic objectives, and aligning itself with the key public policy priorities surrounding cannabis legalization.

PEI Cannabis focuses on the following four (4) strategic areas to measure performance:

• Business Results • Customer Experience • Corporate Citizenship • People & Culture

These strategic pillars, and the tactical initiatives developed within them, serve as a blueprint for incorporating the Vision and Mission Statements into day- to-day operations, the outcomes of which are explained in further detail in this report.

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Sommaire La Société de gestion du cannabis de l’Île-du-Prince-Édouard (SGCIPE) est une société de la Couronne responsable de l’administration de la Cannabis Management Corporation Act (loi sur la Société de gestion du cannabis) de l’Île-du-Prince-Édouard et de ses règlements d’application. La SGCIPE est exploitée sous le nom de marque Cannabis Î.-P.-É. Un conseil des commissaires de cinq membres désignés par le lieutenant-gouverneur en conseil est responsable des activités de la Société. La présidence fait rapport au ministre responsable de Cannabis Î.-P.-É.

Le mandat conféré à l’organisme par la Cannabis Management Corporation Act a deux objectifs principaux :

1. établir le cadre nécessaire pour une gestion socialement responsable de la distribution et de la vente de cannabis et de produits connexes; 2. faciliter et promouvoir la consommation responsable de cannabis et de produits connexes à l’Île- du-Prince-Édouard.

Cannabis Î.-P.-É. s’attend à devenir un levier important de l’économie de la province à moyen et à long terme. Au cours de son deuxième exercice, il a généré plus de 16 millions de dollars en recettes nettes.

Un plan stratégique de trois ans ainsi que des examens du plan d’affaires annuel sont les mécanismes clés pour veiller à ce que Cannabis Î.-P.-É. atteigne ses objectifs stratégiques et se conforme aux priorités clés de politiques publiques entourant la légalisation du cannabis.

Cannabis Î.-P.-É. met l’accent sur quatre domaines stratégiques pour mesurer le rendement :

• • • •

Résultats opérationnels Expérience client Conscience sociale Personnes et culture

Ces piliers stratégiques et les initiatives tactiques développées au sein de ceux-ci servent de plan directeur pour incorporer les énoncés de vision et de mission au sein des activités courantes. Les résultats de celles-ci seront décrits de manière détaillée dans le présent rapport.

PEI Cannabis Î.-P.-É. • 2019 Annual Report 13

Strategic Review Of Operations PEI Cannabis has a 3-year Strategic Plan which guides its activities through to fiscal 2020-2021. The accomplishment of strategic goals is supported by an annual business plan that detail corporate objectives to be accomplished, and measurable targets used to evaluate the degree to which corporate objectives are being met. The following is an overview of the performance in each of the four (4) strategic pillars. STRATEGIC GOAL 1 - BUSINESS RESULTS STRATEGIC GOAL: To become a key contributor to PEI’s general revenue through business excellence and the continuous improvement in operational effectiveness and efficiency.

CORPORATE OBJECTIVES: 1. Grow sales revenues to continuously displace the illicit market;

2. Grow top-line profitability on cannabis products through tactful supplier relations; and 3. Continuously build on the effectiveness and efficiency of cannabis operations through strategic resource deployment.

PEFORMANCE MEASURES Total Net Sales Revenue

Actual 2018-2019

Target 2019-2020

Actual 2019-2020

% of Target 2019-2020

Target 2020-2021

$6,956,964 $15,317,900 $16,355,262

106.77% $14,633,315

Gross Margin

24.88%

28.70%

24.39%

84.98%

25.50%

Net (Loss) income

$(529,095)

$310,000

$653,401

210.77% $(137,100)

NET RECEIPTS

APPLICATION OF NET RECEIPTS

Recognition of Capital Assets

Other Income

Edibles

Accessories

Ingested Extracts

0% Seeds

22% Operating Expenses

0% Beverages

15% Pre-Rolled

NET RECEIPTS 2020

APPLICATION NET RECEIPTS 2020

72% Dried Flower

75%

Suppliers

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TACTICAL SUMMARY PEI Cannabis recognizes the continued presence of a mature, sophisticated illicit cannabis market. Further, this unregulated market still controls much of the PEI market share, and due to the absence of any quality assurance measures or accountability requirements to customers and staff, it also has much lower costs to get product to market. Further, the corporation acknowledges the pre-legalization customer preferences, and how they continue to shape the licit industry’s current and prospective product offerings (i.e. derivative products, genetic, etc.). To successfully compete with existing market sources, PEI Cannabis executed plans focusing on excellence in Category Management, Supply Chain Management, and Risk Management. PEI Cannabis is pleased to have exceeded its sales and profitability targets for fiscal 2020, and more importantly the corporation has achieved success related to incremental illicit market displacement. However, it has also identified some key challenges and opportunities in terms of achieving sustainable outcomes in the medium-to-long term.

PEI Cannabis Î.-P.-É. • 2019 Annual Report 15

KEY HIGHLIGHTS Category Management • Maintained strong relationships with a well-diversified portfolio of suppliers, and ensured consistent access to a range of product options with virtually no retail disruption. • Built on a competitive pricing model that balances public policy priorities and PEI Cannabis corporate objectives surrounding illicit market penetration and responsible sales. Supply Chain Management • PEI Cannabis launched a wide range of Phase 2 cannabis products through FY 19/20 including edibles, beverages, and various concentrates. • Through an ongoing formal shared services agreement with the PEILCC, PEI Cannabis has maintained a strong supply chain framework with no non-COVID retail disruption. Risk Management • Ensured risks related to operational and capital expenditures were contained by PEI Cannabis to ensure profitability targets were reached. • Developed a comprehensive operational readiness plan related to COVID-19 safety measures at such time the stores are permitted to re-open to the public. Key Opportunities & Challenges: 1. It will be challenging for PEI Cannabis to grow profitability while it competes against an illicit sale stream that has re-taken market share due to COVID-19 related store closures. 2. Depending upon how long the stores are closed, may pose financial challenges.

KnowYour Possession Limit

Beverages

Extracts

Edibles

POSSESSION LIMIT

2.1L

7.5g

450g

Topicals

Dried Flower

Seeds

POSSESSION LIMIT 30 Seeds

POSSESSION LIMIT

2,100g

30g

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STRATEGIC GOAL 2 - CUSTOMER EXPERIENCE

STRATEGIC GOAL: To achieve and maintain high levels of customer satisfaction through sales channel accessibility, technical innovation, merchandising value, and fast responsiveness to customer preferences. TACTICAL OBJECTIVES: 1. To provide an engaging retail experience that provides value to PEI Cannabis customers; 2. To facilitate ongoing displacement of the illicit market by attracting new customers; and 3. To provide customers with a unique and diversified product offering that meets their evolving expectations.

PERFORMANCE MEASURES

Actual 2018-2019

Target 2019-2020

Actual 2019-2020

% of Target 2019-2020

Target 2020-2021

Customer Experience Score

N/A

75%

91.06%

121.41%

75%

Customer Counts

180,762

300,000

480,542

160.18%

300,000

Unique SKUs Sold

282

300

491

163.67%

500

CUSTOMER COUNTS

SKU TYPE BY FORMAT

Accessories

Seeds

27 2

Beverages

Edibles

Ingested Extracts

303

Pre-Rolled

Dried Flower

April, 2019 • 33,480

May, 2019 • 36,880

June, 2019 • 36,881

July, 2019 • 43,054

August, 2019 • 47,760

September, 2019 • 33,480

October, 2019 • 41,508

November, 2019 • 42,761

December, 2019 • 43,608

January, 2020 • 44,357

February, 2020 • 39,712

March, 2020 • 29,929

CANNABIS SKU BY SPECIES

CANNABIS SKU BY STRENGTH

Blend

38 CBD

112

Sativa

170 Medium

225 Strong

141

Hybrid

152

Indica

69 Mild

PEI Cannabis Î.-P.-É. • 2019 Annual Report 17

TACTICAL SUMMARY To be viewed as the preferred source of adult use cannabis, PEI Cannabis has established an accessible sales network and an effective product offering. This remains influenced by rigorous analyses of existing customer insights, and is done with the goal of offering an educational and highly-engaging retail experience. Special attention is given to stakeholder engagement in the store network design to ensure the unique sensitivities surrounding cannabis sales do not lead to adverse impacts on the community (e.g. increasing exposure to youth, etc.).

To facilitate sustainable interest in PEI Cannabis as a source of adult-use cannabis, PEI Cannabis continued its execution of plans focusing on Sales Channel Design and Customer Service. It has achieved reasonable short-term success in these areas, but has also identified some key challenges and opportunities in terms of sustaining and building on customer engagement and satisfaction in the medium-to-long term.

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KEY HIGHLIGHTS Sales Channel Design • PEI Cannabis built on its award-winning storefront designs through the development and launch of a completely revamped customer education strategy. • With the COVID-related store closures, PEl Cannabis mobilized quickly to modify the layout of its Charlottetown e-commerce fulfillment site to ensure increased shipping demands were effectively met. Customer Experience • During a period of national supply constraints, PEI Cannabis accomplished 163% of its year two SKU target and had no retail disruption related to a lack of product. • PEI Cannabis exceeded its customer count forecast for a second consecutive year, which is thought to be a positive measurement of the corporation’s ongoing ability to compete and displace the illicit market. KEY OPPORTUNITIES & CHALLENGES: 1. PEI Cannabis has observed substantial growth in the volume of total dried cannabis equivalency of products sold, which it feels represents ongoing opportunities for growth in the domestic market share. 2. New product classes present an opportunity for PEI Cannabis to meet evolving customer preferences and continue displacing the illicit market.

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STRATEGIC GOAL 3 - CORPORATE CITIZENSHIP

STRATEGIC GOAL: To be an excellent corporate citizen with high brand equity achieved through the promotion of responsible cannabis consumption, ongoing stakeholder engagement, and internal CSR campaigns. TACTICAL OBJECTIVES: 1. To build mutually-beneficial stakeholder partnerships that align with the PEICMC’s objectives; 2. Ensure cannabis is retailed in a responsible fashion that is educational in nature and aligns with the promotional restrictions laid out in the Federal Cannabis Act; and 3. Continuously improve the PEICMC’s reputation as an excellent corporate citizen among stakeholders.

PEFORMANCE MEASURES Investment in CSR Initiatives Retail Responsible Service Score Corporate Citizenship Survey Score

Actual 2018-2019

Target 2019-2020

Actual 2019-2020

% of Target 2019-2020

Target 2020-2021

N/A

$100,000

$77,135

77.14%

$50,000

N/A

75%

N/A

80%

86%

107.5%

75%

In December, 2019, Laura Deagle (left) and Colin MacDonald (right) of PEICMC, delivered non-perishable food items donated by PEICMC retail teams, to Mels in Winsloe, PEI, in support of the Hot 105.5 Annual Hot Holiday Food Drive.

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TACTICAL SUMMARY Standing out as a corporate citizen that always conducts its corporate affairs in an ethical, transparent fashion is a key strategic focus for PEI Cannabis. Constant alignment with the primary public policy priorities surrounding legalization is the foundation of the corporation’s business strategy which serves as the common ground it holds with its stakeholders. To be thought of as the preferred provider of cannabis by the public, regardless of their varying perceptions of cannabis use, PEI Cannabis has executed tactical plans focusing on Branding, Social Responsibility, and Stakeholder Engagement. It has achieved reasonable short-term success in these areas. However, it has also identified some key challenges and opportunities related to how the corporation can build on its reputation as a good corporate citizen that creates value for all stakeholders in the medium-to-long term.

PEI Cannabis Î.-P.-É. • 2019 Annual Report 21

KEY HIGHLIGHTS Branding • PEI Cannabis has built on its brand equity and remains firmly aligned with the public policy priorities of protecting youth, educating the public, and displacing the illicit market. • The PEI Cannabis branding strategy underwent a revitalization throughout fiscal 2020, which was primarily focused on enhancing consumer education of cannabis consumption. Social Responsibility • New external partnerships were developed by PEI Cannabis that focused on responsible cannabis consumption (e.g. municipalities, post-secondary institutions, media, etc.). • PEI Cannabis continued to be a member on an inter- departmental Cannabis Harm Prevention Committee that developed and launched a campaign entitled Just the Facts. Stakeholder Engagement • The first Corporate Citizenship Survey was launched by PEI Cannabis to seek and obtain valuable feedback from its full range of external stakeholders. • Through positive relationships with supplier partners and fellow jurisdictional leadership groups, PEI Cannabis constantly contributes toward fostering an effective national cannabis industry focused on the public policy priorities that ushered in legalization. KEY OPPORTUNITIES & CHALLENGES: 1. There are continued opportunities for PEI Cannabis to enhance public awareness and educational campaigns related to the risks and laws associated with cannabis use. 2. Though COVID-19 disrupted its fiscal 2020 efforts that were scheduled for March 2020, a Responsible Service Score conducted by impartial mystery shoppers is a key priority for fiscal 2021. 3. Through its Corporate Citizenship Survey PEI Cannabis has various opportunities to ensure it can create value for its full range of stakeholders.

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STRATEGIC GOAL 4 - PEOPLE & CULTURE

STRATEGIC GOAL: To foster a high-performing, customer-focused culture of engaged employees through open communication, learning & development, safe work environments, and overall wellness. TACTICAL OBJECTIVES: 1. Always recruit, develop and retain the best people through fair labour practices and mobility opportunities; 2. Foster a culture of performance, communication, and engagement; and 3. Establish and continuously promote a healthy, safe, and respectful workplace.

PEFORMANCE MEASURES Staff Retention Rate Employee Engagement Score Employee Wellness Rate

Actual 2018-2019

Target 2019-2020

Actual 2019-2020

% of Target 2019-2020

Target 2020-2021

N/A

95%

96.7%

101.79%

95%

N/A

75%

N/A

96%

97.32%

99.30%

98%

PEI Cannabis Î.-P.-É. • 2019 Annual Report 23

TACTICAL SUMMARY PEI Cannabis maintains its belief that high functioning, knowledgeable, and engaged retail teams are imperative to success in adult-use cannabis sales. To compete with the illicit market PEI Cannabis needs to provide a superior retail experience, and this starts with the corporation’s people. To achieve success in this area, PEI Cannabis continues to execute plans focusing on Workplace Wellness, Engagement, and Professional Success. Short-term success in this area has been realized, which is most notably observed in the customer-oriented retail teams working at PEI Cannabis retail sites.

KEY HIGHLIGHTS Workplace Wellness • PEI Cannabis invested in a series of point-of-sale renovations in fiscal 2020, many of which held optimal ergonomic design for its retail teams as a key objective. • PEI Cannabis achieved 99.30% of its strategic target related to absenteeism due to injury or illness, which is viewed to be a top corporate success and one to build on through fiscal 2020.

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Engagement • PEI Cannabis partnered with an external training provider through fiscal 2020 to facilitate a new, comprehensive training program for all of its retail teams. • Store managers continued to be provided with leadership training to ensure that they are able to foster engagement and continued success within their retail teams. Professional Success • Excellent outcomes around minimal staff turnover over fiscal 2020 is interpreted to be a good sign of a satisfied workforce that continues to view PEI Cannabis as a valued opportunity. • PEI Cannabis maintains a Training & Development Fund available to all employees which seeks to foster mutual growth in its people and the organization as a whole. KEY OPPORTUNITIES & CHALLENGES: 1. PEI Cannabis’s intentions is to complete a formal performance planning, evaluation & coaching program in fiscal 2021. 2. PEI Cannabis must continue to manage absenteeism due to injury or illness so it can preserve the health of its employees and the leanness of its operations. 3. The corporation must continuously provide staff with educational support and growth opportunities to ensure a flexible, scalable, and engaged workforce.

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FEATURED SUPPLIER The Tweed Visitor Centre at Canopy’s Smith Falls, Ontario, headquarters

What are some of the new products that Canopy has released since legalization 2.0? We’ve introduced new products to the recreational market including beverages, chocolates and vapes. Our first ready-to-drink cannabis beverage — Tweed Houndstooth & Soda — was followed by Tweed Bakerstreet & Ginger, Deep Space, Houseplant Grapefruit and Houseplant Lemon. How does Canopy see the adult use recreational cannabis industry evolving? The introduction of new formats are a big driver in the evolution of the industry. We are continually innovating and delivering products that invite consumers to enjoy cannabis through the exploration of new formats and categories. Infused beverages and edibles appeal to people who are curious about cannabis and interested in social, sessionable experiences. The beverage category is one of the most exciting, fastest growing and high potential sectors in our industry. Canopy is building the next generation of adult beverage experiences, and we will continue to introduce new products. We have the ability to give people highly relevant, familiar drinking experiences that deliver on a desired outcome, whether it’s a buzz or moment of relaxation. What can customers expect from Canopy in the next year?

How did Canopy get started? We started six years ago with a simple idea: cannabis is a remarkable plant that can be a force for good. Since then, Canopy Growth has become a world-leading, diversified cannabis and hemp company traded on the New York and Toronto stock exchanges. We were the first to enter a strategic partnership with a Fortune 500 beverage company, Constellation Brands. Across our expanding range of products and retail channels, we are dedicated to growing exceptionally curated cannabis, driving innovation, and creating meaningful customer relationships. What are Canopy’s signature brands? Canopy’s product portfolio includes beverages, edibles, flower, pre-rolls, vapes, topicals, oils and softgels. Tweed and Tokyo Smoke are our signature brands, with retail locations under both banners. We’ve launched subsidiary brands — including Deep Space, our highest-potency THC beverage, and value offerings Twd. and Simple Stash — and we work with high profile partner brands like Houseplant, Martha Stewart, BioSteel, ThisWorks, LBS and DNA to bring best-in-class products to consumers.

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Retail Storefront Distribution STRATEGIC GOAL 1 - BUSINESS

PEI Cannabis Retail Store

Address

Phone

O’Leary

478 Main St., O’Leary, PE C0B 1V0

902-859-0392 902-438-4989 902-569-7758 902-838-0924

Summerside Charlottetown

447 Granville St., Summerside, PE C1N 3C4 85D Belvedere Ave. – Charlottetown, PE – C1A 6B2

Montague

509 Main St. – Montague, PE – C0A 1R0

PEI Cannabis Î.-P.-É. • 2019 Annual Report 27

Additional Statistical Breakdown

STORE BY STORE NET SALES ANALYSIS

PEI Cannabis Storefront

Total Net Receipts

% of Sales revenue

Charlottetown Summerside

$9,576,983 $3,635,782 $2,275,227

58.56% 22.23% 13.91% 4.21% 1.10%

Montague

O’Leary

$688,016 $179,254

Online

Total

$16,355,262

100%

DRIED CANNABIS EQUIVALENCY SALES:

By Format

By Species

Blend

Pre-Rolled

3% CBD

Ingested Extracts

26% Sativa

Edibles

27% Hybrid

78% Dried Flower

39%

Indica

<1% Clones & Seeds

<1% Beverages

DRIED FLOWER SALES BY PACK SIZE

5% 15g

14% 7g

13% 1g

1% 28g

67% 3.5g

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OPERATING EXPENSES ANALYSIS