ianthus capital holdings, inc.... · 2019-05-14 · ianthus enters the 4th largest state in the...

December 2017

iAnthus Capital Holdings, Inc. CNSX: IAN OTCQB: ITHUF

2017 Company Overview

2

Disclaimer (1 of 2)

Business Overview • December 2017

Cautionary Note Regarding Forward-Looking Information

• This investor presentation, dated November 28, 2017 (this “Presentation”), contains “forward-looking information regarding iAnthusCapital Holdings, Inc. (“iAnthus” or the “Company”) and its subsidiaries.

• Statements in this Presentation that are forward-looking statements are subject to various risks and uncertainties concerning the specificfactors disclosed herein and elsewhere in iAnthus' periodic filings with Canadian securities regulators. When used in this Presentation,words such as “will, could, plan, estimate, expect, anticipate, intend, may, potential, believe, should,” and similar expressions, are forward-looking statements.

• Although iAnthus has attempted to identify important factors that could cause actual results, performance or achievements to differmaterially from those contained in the forward-looking statements, there can be other factors that cause results, performance orachievements not to be as anticipated, estimated or intended, including, but not limited to: dependence on obtaining regulatory approvals;investing in target companies or projects which have limited or no operating history and are engaged in activities the Company believes tobe compliant with applicable U.S. state and local law, but are currently considered illegal under US Federal laws; change in laws; limitedoperating history; reliance on management; requirements for additional financing; competition; hindering market growth and stateadoption due to inconsistent public opinion and perception of the medical-use and adult-use cannabis industry and; regulatory or politicalchange. Forward-looking statements involve known and unknown risks, uncertainties and other factors. Many of these risk factors anduncertainties are disclosed in the Company’s Annual Information Form for the year-ended December 31, 2016 in a section entitled “RiskFactors” and other documents the Company files with the Canadian securities regulators on SEDAR at www.sedar.com.

• There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of futuredevelopments, circumstances or results will materialize. As a result of these risks and uncertainties, the results or events predicted in theseforward-looking statements may differ materially from actual results or events.

• Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this Presentationare made as of the date of this Presentation. iAnthus disclaims any intention or obligation to update or revise such information, except asrequired by applicable law, and iAnthus does not assume any liability for disclosure relating to any other company mentioned herein.

Securities Laws

• This Presentation is for informational purposes and does not constitute an offer or a solicitation of an offer to purchase thesecurities referred to herein.

• iAnthus’ shares have not been and will not be registered under the United States Securities Act of 1933, as amended.

• iAnthus expressly disclaims any and all responsibility for any direct or consequential loss or damage of any kind whatsoeverarising directly or indirectly from: (i) reliance on any information contained herein, (ii) any error, omission, or inaccuracy in anysuch information, or (iii) any action resulting therefrom.

No Reproduction or Distribution

• The contents of this Presentation are not to be reproduced or distributed to any third party, including the general public or themedia, without the express written consent of iAnthus.

Market and Industry Data

• This Presentation includes market and industry data that has been obtained from third party sources, including industrypublications. iAnthus believes that the industry data is accurate and that the estimates and assumptions are reasonable, butthere is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the informationcontained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy orcompleteness of included information. Although the data is believed to be reliable, iAnthus has not independently verified anyof the data from third party sources referred to in this Presentation or ascertained the underlying economic assumptions reliedupon by such sources.

Additional Information

• Additional information pertaining to iAnthus has been filed electronically through SEDAR and is available at www.sedar.com oriAnthus’ website at www.ianthuscapital.com.

3Business Overview • December 2017

Disclaimer (2 of 2)

The iAnthus Opportunity

iAnthus operates best-in-class licensed cannabis

facilities throughout the United States providing

investors with diversified industry exposure

The iAnthus Mission


Why Invest in iAnthus?


Exposure to $50 billionU.S. Market

DiversifiedOperations

Proven Management

Team

Compelling Valuation

Near Term Catalysts

Fastest growing

industry in the U.S.

New York(1)

MassachusettsFlorida

VermontNew Mexico

Colorado

Expertise in:

Operations

Regulated industries

Healthcare

Lobbying

Real estate

Corporate finance

Trades at a significant discount to

Canadian LPs and U.S.

competitors

Opening of multiple

dispensaries and cultivation

facilities in New York and

Massachusetts

NOTES

(1) Assuming completion of Citiva acquisition announced August 14, 2017. Transaction expected to close Q4 2017

7

NOTES

(1) The Marijuana Business Factbook 2016, Marijuana Business Daily; Economic Factbook, CDC; The Future of Textbooks, Mckinsey & Company

(2) The Cannabis Industry Annual Report: 2017 Legal Marijuana Outlook, New Frontier Data.

$50 Billion Market Moving

from “Black to White”

$0.8

$1.5

$6.6

$10.0

$12.0

$19.6

$21.0

$35.9

$37.6

$50.0

$80.0

$101.5

$0 $50 $100

Girl Scout Cookies

E-Cigarettes

2016 Legal Cannabis Sales

Textbooks

National Football League

Craft Beer

Chocolate

Organic Food

Wine

Cannabis Demand

Tobacco

Beer

Sales (Billions USD)

$4.6

$5.7

$6.6

$8.0

$10.8

$13.4

$16.0

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

2014 2015 2016 2017 2018 2019 2020

Sale

s (B

illio

ns

USD

)

Exceptional Market Opportunity


“Built in” 25% Compound

Annual Growth Rate

8

Recreational Use & Medical

Medical Only

CBD Only(1)

No Laws

State-Driven Legalization…


Medical use in 29 states

Adult use in 8 states

93% ofAmericans have access

NOTES

(1) CBD Only states permits medicinal use of cannabis products that have little or no THC

9

• Bipartisan U.S. Congressional Support

• Rohrabacher-Farr Medical Cannabis Amendment

• "Cole Memo” from U.S. Dept. of Justice in 2013


…and a Federal Government “Leading from Behind”…

Recently reinforced by U.S. Attorney General Jeff Sessions

10

• Commercial and investment banks

• Private equity and venture capital

• Tax and accounting

• Legal counsel

• Lobbying and regulatory


…has led to Capital Sources and Business Advisors on the Sideline…

… and the iAnthus Opportunity


• Cannabis

• Operations

• Corporate finance

• Regulations

• Real estate

• Government relations

• Public company

The iAnthus Platform combines operations in multiple states and expertise across multiple disciplines

7Cultivation Facilities

4Processing Facilities

15Dispensaries

Operating in Six U.S. States(1)

NOTES


12

Unparalleled Ability to Execute


RANDY MASLOW

Co-founder & President

•CARLOS PEREA

COO

•KIM VOLMAN

CEO of Citiva

•HADLEY FORD

Co-founder & CEO

•JULIUS KALCEVICH

CFO & Director

•JOHN HENDERSON

Chief Development Officer

Finance and Capital

Markets

Operations

Regulatory and

Government Affairs

Real Estate and

Project Development

•DR. RICHARD BOXER

Board Member

iAnthus Operations

iAnthus is Operating in Six(1) States


Current investments

Active discussions

• Ownership: 79%(2)

• Investment: $11.7 million

• One of only three dispensary licenses in Boston

• Ownership: 100%(2)


• Potential to legalize adult use

New Mexico

Massachusetts

Vermont

Colorado

• Owner of key assets


• Market share leader in popular ski town

Colorado

• Strategic Investment

• Loan Amount: $7.5 million

• Top 5 operator in the state

• Ownership: 100%


• Population of 20 million with 10 licenses state wide

New York(1)

NOTES


(2) As of November 28, 2017, iAnthus has loaned Grassroots Vermont US$900,000 and Mayflower Medicinals US$11.7 million;

iAnthus holds the right to convert its loans into majority controlled positions and anticipates the conversion to occur by Q4 2017

Florida

• Ownership: 6.1%

• Investment: $3.0 million, $2.0 million credit facility

• Up to 25 dispensaries• Ownership: 25%


• One of the market share leaders

New York, New York it’s a Helluva State

15

New York Highlights:

• Large population of 20 million residents

• Only 10 licenses

• Vertically integrated licenses

• Wide range of secondary products allowed:

• Home delivery allowed


16

The Citiva Acquisition


NOTES

(1) For conservatism, we are including the anticipated 2018 and 2019 capex spend in the calculation of enterprise value for Citiva

Purchase Price

Form of Consideration

Acquisition Multiple(1)

Conditions and Timing

• US$18.0 million

• US$3.6 million payable in cash• US$14.4 million payable in IAN shares

• 2018E EV/EBITDA: 18.7x• 2019E EV/EBITDA: 2.1x

• New York State Department of Health approval; Canadian Securities Exchange approval; and completion of definitive documentation between parties

• Anticipated closing Q4 2017

New York

$18.0 million for one of ten

licenses in an addressable market of 20

million people

17

Citiva: One of Two in Brooklyn


Artistic rendering

Brooklyn

2,600,000 people

One of two dispensaries

Brooklyn Highlights:

• 2.6 million residents

• One competitor

• Experienced team

• Great location

• Delivery allowed

• Open in Q2 2018

18

Citiva: Alone in Staten Island

Staten Island

500,000 people

Only one dispensary


Staten Island Highlights:

• 500,000 residents

• No competitor

• Home base for our CMO


• Open in Q2 2018

Massachusetts Highlights:

• 6.7 million residents

• 13.2 million people reside within 150 miles of Boston

• Recreational sales are expected to begin in July 2018

• 38% CAGR through 2025

• Limited number of operators

Massachusetts, The Colorado of the East


NOTES

(1) The Cannabis Industry Annual Report: 2017 Legal Marijuana Outlook, New Frontier Data

$52 $106

$150 $175 $200

$307

$554

$802

$0

$200

$400

$600

$800

$1,000

2016 2017E 2018E 2019E 2020E

Re

ven

ue

(M

illio

ns

USD

)

Massachusetts Cannabis Revenue(1)

Recreational Medical

$ 457

$ 1,020

$ 729

20

iAnthus in Massachusetts

• Mayflower Medicinals

• Cultivation and processing

• Prime retail location in a popular Boston(1) neighborhood

• Two additional locations

State Program

• Only 15 stores open

• Program allows flower, edibles, and other extracts

• Long list of indications, including chronic pain

• Full rec in July 2018

Boston

Massachusetts: Greenfield with Limited Competition


NOTES(1) Provisionally licensed locations provide the ability to begin construction on facilities, with final license issued upon

successful state inspections

Artistic rendering

Mayflower Medicinals Dispensary

21

Mayflower: One of Three in Boston


Artistic rendering

Boston

670,000 people

One of three dispensaries

Boston Highlights:

• 670,000 residents, 800,000 commuters and 150,000 students

• Two competitors

• Great location


• Open in Q2 2018

iAnthus Moves to Florida

Let the Sun Shine in!

23

iAnthus enters the 4th largest state in the U.S. with 6.1% ownership and exclusive dealing period with GrowHealthy


Florida Highlights:

• 20 million residents

• Limited number of operators

• Favorable demographics

• Wide range of indications

• Large variety of products

• Market estimated to reach US$1.0 billion by 2020 / 21(1)

NOTES

(1) ArcView

GrowHealthy: Open for Business

24

West Palm Beach (Flagship Store)

4,500 SFOpen: Q2 2018

Construction Start

5-Miles Radius Population

Nearest Competitor

Q1 2018 271,300 9 miles away

Current Canopy Space

Total Cultivation Facility

Processing Facility

10,000 SF ~200,000 SF 15,000 SF

• Inventory on hand• Deliveries have started


Cultivation Facility – Lake Wales

Artistic renderings

Great location with limited competition

• 70,000 cars a day• Plenty of parking

Proforma East Coast Footprint

25

New York Massachusetts Vermont Florida Total

Population 20.0 million 6.8 million 0.6 million 20.6 million 48.0 million

2018E Market Size $340 million $455 million $20 million $380 million $1.2 billion

Expected Equity Ownership

100%(1) 79%(2) 100%(2) 6.1%

Facilities4 dispensaries1 cultivation

facility

3 dispensaries1 cultivation

facility

2 dispensary(3)

1 cultivation facility

25 disp.1 cultivation

facility

34 disp.4 cultivation

facilities

Competition1 of 10 licenses

1 of ~35 licenses

1 of 5 licenses1 of 17 licenses

15 weighted average

competitors

NOTES


(2) iAnthus holds the right to convert its loans into majority controlled positions and anticipates the conversion to occur by Q4 2017

(3) Recent legislation allows Grassroots Vermont to open an additional dispensary (2 total) and will also grant one additional license (5 total)


48.0 million residents and US$1.2 billion 2018 market with limited competition

Potential Addressable Market of US$8.0 Billion

26

If Florida and New York become full recreational, the market could expand to almost US$8.0 billion(1)

$2,196

$5,679

$7,875

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

Medical Recreational Medical & Recreational

Rev

enu

e (U

S$ m

m)

Illustrative Four State Footprint Near Term Market Revenue(2)

NOTES

(1) Company estimates. Assumes 1.5% penetration for medical markets and 8% penetration for recreational markets

(2) Illustrative four states footprint includes Massachusetts, Vermont, New York, and Florida. Refer to Appendix for detailed assumptions and calculations.


The medical and full rec opportunity

iAnthus Investment Thesis

StateSample

OperatorMarket

PopulationDispensary

Competition(2)

Revenue per Dispensary

Operator #1Medical

675,000 1 of 3 $12 million

Operator #2Medical

275,000 2 of 3 $11 million

Operator #3Medical

300,000Sole

Dispensary

$10 million

Operator #4Medical

1,050,000 2 of 3 $12 million

StateSample

OperatorMarket

PopulationDispensary

Competition(2)

Revenue per Dispensary

Operator #1Medical

420,000 1 of 7 $25 million

Operator #2Medical

1,025,000 1 of 20 $10 million

Operator #3Medical &

Recreational650,000 5 of 140 $5 million


Recreational110,000 1 of 25 $12 million


Recreational2,850,000 10 of 200 $6 million

In the U.S., Revenues are Generated Through Dispensaries…

28

Dispensaries in Highly Competitive Markets(1) Dispensaries in Restricted License Markets(1)

NOTES

(1) Company estimates

(2) Estimated number of dispensaries located in the same market

Well located dispensaries generate millions in revenue


29

…and More Dispensaries Means More Revenues


NY 4

MA 3

CO 1

VT 2

+ New mkt 10

20 Dispensaries

NY 4

MA 3

CO 1

VT 2

+ New mkt 25

35 Dispensaries

Illustrative Dispensaries:

5 10 15 20

$2.5 12.5 25.0 37.5 50.0

$5.0 25.0 50.0 75.0 100.0

$7.5 37.5 75.0 112.5 150.0

Illustrative Dispensaries Open

Re

ven

ue

/ D

isp

en

sary 20 25 30 35

$5.0 100.0 125.0 150.0 175.0

$10.0 200.0 250.0 300.0 350.0

$15.0 300.0 375.0 450.0 525.0

Illustrative Dispensaries Open

Re

ven

ue

/ D

isp

en

sary

Run-Rate 2018 Revenue (USD MM)

Illustrative Dispensaries:

Run-Rate 2019 Revenue (USD MM)

As iAnthus expands its operations,

revenues should grow rapidly

30

A Tale of Two Investments


Canada (Vertically Int)

iAnthus East Coast Markets(1) Metric

Population 36 million 48 million 33% larger

Near Term Rec and Medical Market

C$6.0 billion C$9.8 billion 64% larger

Competitors 73 13.5(2) 82% fewer

Revenue Per Competitor

C$82.2 million C$722.0 million 9x more

Public Companies 24 1

Average / Current Market Cap

~C$607.9 million ~C$96.7 million(3) 84% discount

Public investors have one clear way to profit from the growth in the U.S. markets

No matter which metric you use, iAnthus has a

clear advantage

And yet trades at a significant discount to the

“average” Canadian LP

NOTES

(1) East coast markets include Massachusetts, Vermont, New York, and Florida

(2) Weighted average license holders by population in Massachusetts, Vermont, New York, and Florida

(3) Assumes closing of Citiva transaction. Pro forma basic shares of 44.2 million times C$2.19 per share.

31

C$107.9 million

• 6.1% Florida (in exclusive dealing period)

• 100% New York(2)

• 100% Vermont

• 100% Organix

• 79% Massachusetts

• 25% New Mexico

C$579.4 million

• 100% Florida(3)

Current Enterprise Value(1)

VS

Current Enterprise Value(1)

Cannabis Assets / Licenses Owned Cannabis Assets / Licenses Owned

iAnthus has exposure to six states and still trades at an

~81% discount to Liberty Health Sciences


NOTES

(1) Values as of November 28, 2017, iAnthus pro forma for Citiva acquisition


(3) Liberty Health Sciences is a publicly traded entity in Canada, whose only asset is one of the twelve currently issued licenses in Florida

iAnthus vs. Liberty: Valuation Disconnect

iAnthus Highlights


Large U.S. market opportunityExposure to $50 billion

market

Compelling valuationLimited ways to participate in

the legalization of U.S. cannabis

Diversified operations Operating in six states(1)

Professional management teamBest-in-class team with decades of experience

NOTES


Near term catalystsOpening of dispensaries and

cultivation facilities

Questions?

Contact Information: Investor Relations | 416.428.3533 | [email protected]

What About Trump?

34

Bipartisan Support:• 89% of Americans support medical cannabis

legalization (1)

• 60% of Americans support full legalization for adults 21+ (2)

• 62% of Congress supports cannabis (3)

Economic Impact:• $200 million of cannabis tax revenue generated

in Colorado alone in 2016

• 150,000 jobs created by the U.S. cannabis industry


NOTES(1) Allow Marijuana for Vets with PTSD, Quinnipiac University National Poll, June 2016

(2) Support for Legal Marijuana Use Up to 60% in U.S., Gallup Poll, October 2016(3) NORML 2016 Congressional Scorecard

35

Pro-forma Capital Structure


Capital Structure

Basic Shares Outstanding

Common (Voting) 26.35 M

Common (Class A: Non-Voting) 11.26 M

Pro forma NY Acquisition(1) 6.55 M

Total Basic Shares Outstanding 44.16 M

Dilutive Securities

Options (Strike C$1.35 – C$3.10) 3.99 M

Warrants (Strike C$1.74 – C$3.00) 1.70 M

Convertible Notes (US$1.65) 0.77 M

Unsecured Convertible Debentures (Strike C$3.10) 6.16 M

Total Dilutive Securities 12.62 M

Total Fully Diluted Shares Outstanding (Pro forma) 56.78 M

NOTES(1) Assumes share price of US$2.20

ianthus capital holdings, inc.... · 2019-05-14 · ianthus enters the 4th largest state in the...

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