PEI Cannabis Management Corporation - 2019 Annual Report

KEY HIGHLIGHTS Category Management

• Fostered strong relationships with well-diversified portfolio of suppliers, and maintained consistent access to a range of product options and endured virtually no retail disruption. • Introduced a competitive pricing model that tactfully balances public policy priorities and PEI Cannabis corporate objectives surrounding illicit market penetration and responsible sales. Supply Chain Management • Under considerable time constraints, PEI Cannabis launched an accessible, scalable storefront network tied to geographic distribution, population density, and e-commerce. • Through a formal shared services agreement with the PEILCC, PEI Cannabis established a strong supply chain framework supported by industry experience and existing systems architecture. Risk Management • Risks related to operational and capital expenditures were contained by PEI Cannabis during roll- out due to uncertainty surrounding the demand for legal cannabis. • Deployed robust security measures related to PEI Cannabis facilities and information technology systems to mitigate threats to customer information and product theft. Key Opportunities & Challenges: 1. There are opportunities for continuous improvement as it relates to operational, supply chain, and systems framework held by PEI Cannabis. 2. It will be challenging for PEI Cannabis to grow profitability while it competes against an illicit sales stream that has much lower overhead. 3. Emerging products that are widely available from illicit sources will inhibit the rate at which PEI Cannabis captures the full demand of cannabis in PEI.

16 www.peicannabiscorp.com • 2019 Annual Report