Veda Biopharma Cannabis Business Plan by Concord Business Plans

BUSINESS PLAN / 2019

– Notice – The information presented in this document is highly sensitive and confidential and is to be used by authorized parties for the purpose of determining a preliminary indication of interest in Veda BioPharma S.A. de C.V., (“Veda BioPharma,” “Veda” or “the Company.”) The recipient of the Business Plan agrees by its receipt not to reproduce, duplicate, or reveal, in whole or in part, information presented herein without the written permission of the Company. The information contained in the Business Plan was provided by the Company and other sources. It has been reviewed, approved, and released by the Company, who assumes responsibility for its contents. Estimates and projections contained herein have been prepared by the management of the Company, involve significant elements of subjective judgment and analysis, and are based on certain assumptions. Actual results may vary from estimates and projections and these variations may be material. No representation or warranty, expressed or implied, is made as to the accuracy or completeness of the information contained in this overview, and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. The Business Plan does not purport to contain all of the information that may be required to fully evaluate the Company for a potential business relationship, and any recipient thereof should conduct its own independent analysis and due diligence process. THIS PRESENTATION IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITY. For additional information, contact: VEDA BIOPH A RMA S. A. DE C. V. Davide Tomassini Bosque De Robles 117, Bosque de Las Lomas, Miguel Hidalgo, Mexico City, Mexico 11700 Tel: Email: tmsdavide@gmail.com This Business Plan was prepared by:

C ON C ORD BUSIN ESS DEV EL OPM EN T IN C. 500-666 Burrard Street Vancouver, BC V6C 3P6 Canada Tel: (604) 689-2556 Fax: (604) 689-7758 Website: www.concordbusiness.com Email: info@concordbusiness.com

VEDA BIOPHARMA BUSINESS PLAN

BUSIN ESS PL AN H IGHL I GH TS

Name of Company

Veda BioPharma S.A. de C.V.

Business

A vertically-integrated cannabis company providing products from seed to point of sale.

Products

Hemp-derived CBD products featuring multiple delivery methods, including: edible (capsules, tinctures, sublingual applications and buccal applications) and topical (creams, sprays, mists, topical gels and aerosols.)

Value Proposition

1. Substantial distribution network (1,000+ pharmacies across 8 subrogated states in the Mexican republic, servicing 15+ million patients); 2. Vertically-integrated strategy covering the full spectrum of the cannabis supply chain; 3. Industry expertise, incl. regulatory environments & compliance, branding & marketing and R&D & cultivation.)

Target Market

Individuals in keys markets that suffer from chronic pain (6 million1 in Canada, 35.7 million2 in Mexico, and 19.6 million3 in the U.S.); cannabis consumers (5.3 million4 in Canada and 1.4 million5 in Mexico.)

Funds Required

Phase 1: $3 Million; Phase 2: $5 Million; Phase 3: $30 Million.

Revenue Projections

To be added.

TOTA L REVEN UES A N D OPERA TI N G INCOM E To be added.

1 “Prevalence of chronic pain among individuals with neurological conditions.” Statistics Canada, 2018. 2 Institute for Health Metrics and Evaluation, 2018. 3 “The Global Hemp Industry Outlook 2019.” New Frontier Data, 2019. 4 “National Cannabis Survey, first quarter 2019.” Statistics Canada, 2019. 5 “The Global Hemp Industry Outlook 2019.” New Frontier Data, 2019.

VEDA BIOPHARMA BUSINESS PLAN

TA BL E OF CON TEN TS 1

EXECUTIVE SUMMARY .................................................................................................................... 1

1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9

Company Overview ....................................................................................................................................... 1 Joint Venture Partnership ............................................................................................................................. 1 Product Lines ................................................................................................................................................... 1 Value Proposition ........................................................................................................................................... 2 Market Overview ............................................................................................................................................ 3 Capital Requirement ...................................................................................................................................... 3 Financial Summary ........................................................................................................................................ 3 Return On Investment ................................................................................................................................... 3 The Opportunity .............................................................................................................................................. 4

CORPORATE OVERVIEW ............................................................................................................... 5

2.1 2.2 2.3 2.4 2.4.1 2.4.2 2.5

Mission ............................................................................................................................................................... 5 Corporate Data ............................................................................................................................................... 5 Management.................................................................................................................................................... 7 Joint Venture Partnership ............................................................................................................................. 8 Pasha Brands ......................................................................................................................................... 8 InterMed ................................................................................................................................................... 9 Business Model ............................................................................................................................................... 9

PRODUCT LINES.............................................................................................................................10

3.1 3.2 3.2.1 3.2.2 3.3 3.3.1 3.3.2 3.3.3

Products Overview .......................................................................................................................................10 Cannabinoids.................................................................................................................................................11 Medicinal Uses of Cannabis .............................................................................................................11 Health Benefits ....................................................................................................................................12 Veda CBD Products .....................................................................................................................................13 CBD Therapeutics ...............................................................................................................................13 Jane Hand-Crafted CBD....................................................................................................................14 iCBD Products ......................................................................................................................................14

INDUSTRY ANALYSIS ....................................................................................................................15

4.1 4.2 4.3 4.4 4.4.1 4.4.2 4.4.3 4.5 4.5.1 4.5.2 4.5.3 4.6 4.6.1

Global Cannabis Markets ...........................................................................................................................15 Opportunities in Latin America are on the Rise ...................................................................................17 Regulation History in Mexico ....................................................................................................................19 Mexican Cannabis Market .........................................................................................................................20 Mexican Cannabis Market by the Numbers.................................................................................20 Market Drivers ......................................................................................................................................20 Market Opportunities .........................................................................................................................22 Canadian Cannabis Market.......................................................................................................................23 Hemp Cultivation.................................................................................................................................24 Cannabis Consumption .....................................................................................................................26 Impacts of Evolving Regulations.....................................................................................................27 The CBD Market............................................................................................................................................29 LP’s CBD Strategies ...........................................................................................................................29

VEDA BIOPHARMA BUSINESS PLAN

4.6.2 4.6.3 4.6.4 4.6.5

CBD Usage and Medical Conditions ..............................................................................................30 Aggregate Demand for CBD Products .........................................................................................31 Nutraceuticals and Wellness Markets ..........................................................................................32 CBD Beauty Markets ..........................................................................................................................32

COMPETITIVE LANDSCAPE .........................................................................................................34

5.1 5.1.1 5.1.2 5.2

Competitive Analysis ...................................................................................................................................34 Canadian Vertically-Integrated Companies ................................................................................34 Cannabis-Related Companies in Expanding into Mexico .......................................................35 Competitive Advantage..............................................................................................................................36

MARKETING PLAN .........................................................................................................................37

6.1 6.1.1 6.1.2 6.1.3 6.2 6.3 6.4 6.5 6.5.1 6.6 6.6.1 6.7 6.7.1 6.7.2 6.8

Distribution Strategies ................................................................................................................................37 Mexico.....................................................................................................................................................37 Canada...................................................................................................................................................37 United States ........................................................................................................................................37 Marketing Strategy ......................................................................................................................................37 Target Markets ..............................................................................................................................................38 Cannabis Consumer Archetypes .............................................................................................................38 Brand Strategies ...........................................................................................................................................39 Examples of Strategic Brand Direction .........................................................................................39 Digital Marketing Strategy.........................................................................................................................40 Web Strategy and Development Plan ..........................................................................................40 Industry Associations ..................................................................................................................................41 Canada...................................................................................................................................................41 United States ........................................................................................................................................41 Industry Events..............................................................................................................................................41

FINANCIAL ANALYSIS ...................................................................................................................43

7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11

Capital Requirement ....................................................................................................................................43 Revenue Assumptions ................................................................................................................................43 Revenue Summary .......................................................................................................................................43 Profitability and ROI ....................................................................................................................................43 Income Statement ........................................................................................................................................43 Balance Sheet................................................................................................................................................43 Cash Flows .....................................................................................................................................................43 Benchmarks and Breakeven Analysis ....................................................................................................43 Ratios Analysis..............................................................................................................................................44 Sensitivity Analysis ......................................................................................................................................44 Net Present Value ........................................................................................................................................44

BIBLIOGRAPHY...............................................................................................................................45

VEDA BIOPHARMA BUSINESS PLAN

1 Executive Summary VEDA BIOPHARMA OVERV IEW

1.1 COMPANY OVERVIEW Veda BioPharma S.A. de C.V. (“Veda BioPharma,” Veda” or “the Company”) is a vertically-integrated cannabis company focused on cultivating, manufacturing, distributing and wholesaling plant-based products in Mexico, Canada and internationally. The Company was founded on the core principle that high-quality cannabidiol (“CBD”) therapies are the most effective solution for optimal health and living. Boasting decades of experience in both the cannabis and pharmaceutical sectors, Veda has utilized hemp applications since its inception. With its existing, long-standing presence in the market, Veda BioPharma is positioned to be an industry leader, operating within the full spectrum of the cannabis supply chain – including R&D, cultivation, manufacturing, distribution, along with retail and wholesale.

1.2 JOINT VENTURE PARTNERSHIP Veda BioPharma is a joint-venture (“JV”) partnership between Pasha Brands Ltd. (“Pasha Brands”), a Canadian cannabis power-house with multiple subsidiaries operating in various segments within the cannabis sector, and Intercontinental de Medicamento S.A. de C.V. (“InterMed”), a Mexican pharmaceutical distribution company operating across eight subrogated states in the Mexican republic. The two companies have entered into a JV agreement in an effort to capitalize on their respective strengths and effectively serve the Mexican and Canadian markets.

1.3 PRODUCT LINES Veda BioPharma will produce and sell hemp-derived CBD products featuring multiple delivery methods, including: edible (capsules, tinctures, sublingual applications and buccal applications) and topical (creams, sprays, mists, topical gels and aerosols.) Veda will commence operations with three distinct product lines: CBD Therapeutics, iCBD and Jane Hand-Crafted CBD. Veda BioPharma aims to consistently deliver the highest possible quality product, utilizing the latest science and technology.

VEDA BIOPHARMA BUSINESS PLAN

1.4 VALUE PROPOSITION POSITION & ALLIANCES After decades in the pharmaceuticals sector, Veda BioPharma is entering the legal cannabis markets in Mexico and Canada with the long-developed expertise, strategic partnerships and regulatory fluency that remains unrivaled by the Company’s peers. Veda is in a prime position to capture a significant share of both Mexican and Canadian markets through the Company’s established distribution channels. InterMed has access to over 1,000 pharmacies across eight subrogated states in Mexico, as servicing a network of over 15 million patients. Pasha has obtained its Health Canada licenses, permitting the sale of cannabis products to provincial distribution boards, and has entered into a partnership with Southern Glazier’s Wine & Spirits for the potential distribution of products across the United States. Utilizing these sales channels, the Company has a direct pulse on the consumer marketplace, putting Veda in a strong position against its peers.

VERTICALLY-INTEGRATED STRATEGY The Company's vertically integrated strategy in the cannabis (cannabinoid) market (farm to retail) gives Veda BioPharma a large profit margin to work with. By dominating the various categories across the supply chain, Veda a significant advantage over its competitors in terms of volatility in market prices, enabling the Company to remain profitable in highly competitive market conditions. Additionally, because Veda will be operating and managing all product verticals, the Company has the ability to adjust and allocate resources and scale areas in the marketplace that are more profitable within the targeted market segments.

BRAND POSITIONING Veda BioPharma’s product lines will be positioned in a manner to appeal to both the modern cannabis consumer and medical cannabis patients. Veda’s seed-to-sale strategy will drive the messaging of organic Canadian CBD products. Furthermore, Pasha employs a network of cannabis consultants and experts in the branding, marketing and compliance categories, providing Veda BioPharma direct access to multi-disciplinary resources unavailable to competitors.

VEDA BIOPHARMA BUSINESS PLAN

1.5 MARKET OVERVIEW On a global scale, the cannabis industry is projected be worth as much as US$130 billion by 2029, 6 pending the anticipated wave of legalization across the United States, Europe and Latin America, according to a report by New York-based investment bank Jefferies Group LLC. Jefferies Group’s projection for the global cannabis sector is based on the prospect that in the coming years, the U.S. and all countries in Europe and Latin America will legalize cannabis for recreational and medical purposes, as well as the potential penetration of other industry sectors in those markets, such as pharmaceuticals, alcohol, health and wellness and pet care. The liberalization of the cannabis space in those markets is estimated to be worth about US$80 billion by 2029, and is added on top of Jefferies’ base valuation for the global cannabis industry of US$50 billion by 2029, a conservative figure that only includes the 22 countries which have already legalized marijuana for medical or recreational purposes. CBD is being pitched as holistic way to alleviate ailments including pain, inflammation, anxiety, and insomnia. The surge in demand for CBD, one of the non-psychoactive cannabinoids in the Cannabis Sativa plant, is helping fuel the global “green rush.” The cannabinoid has become a coveted ingredient in a host of consumer products, from skin lotions to sparkling water to tinctures to dog biscuits. Researchers estimate the market for CBD in the U.S. alone could be worth almost $24 billion by 20237. In Canada, sales of legal cannabis may reach $4.7 billion by that time, up from about $570 million in 2018, according to BDS Analytics8. Analysts posit that annual sales of CBD could potentially be larger than those of marijuana, because of the large number of products in which it can be used. In Mexico, where medical cannabis is legal and recreational cannabis legalization is rapidly approaching, the market opportunities are abundant. According to a report by New Frontier Data, there are an estimated 1.4 million cannabis consumers in Mexico9.

1.6 CAPITAL REQUIREMENT For the purposes of this Business Plan, Veda BioPharma seeks the following in capital funding: Phase 1: $3,000,000; Phase 2: $5,000,000; Phase 2: $30,000,000.

1.7 FINANCIAL SUMMARY To be added.

1.8 RETURN ON INVESTMENT To be added.

6 “Global cannabis market could be worth up to US$130B by 2029: Jefferies.” Bloomberg, 2019. 7 “Booming Demand for CBD Is Making Hemp the Cannabis Cash Crop” Bloomberg, 2019. 8 “The State of Legal Marijuana Markets 6e – 2019 Update.” Arcview Market Research, 2019. 9 “The Latin America Regional Cannabis Report: 2019 Industry Outlook” New Frontier Data, 2019.

VEDA BIOPHARMA BUSINESS PLAN

1.9 THE OPPORTUNITY Veda BioPharma enters the cannabis and nutraceuticals markets with the unique approach of advanced biotechnology and cannabis expertise at the forefront of the Company’s strategic vision. Veda seeks to expand its operations to cover the entirety of the nutraceuticals spectrum across the Americas and internationally, and unlike its competitors, has the resources, strategic alliances and licenses in place to do so. With its hemp-derived CBD applications and products, Veda will be active in the nutraceuticals space – a market expected to reach $578 billion by 2025. 10 With the breadth of product lines targeting the skincare sector (valued at $50.48 billion globally in 201811) and CBD sector (valued at $1.9 billion in 201812), Veda BioPharma is positioned to seize a substantial share of the collective markets upon further buildout and development of its operations. Veda will become a formidable player in the lucrative cannabis, CBD and nutraceuticals markets by building and expanding the Company’s brand awareness in the industry while fostering a strong foundation in biotechnology. According to Grand View Research, North American pharmaceutical and biotech companies have experienced great success in the recent years resulting in larger share of the biotechnology market, which is expected to reach $727.1 billion by 2025.13 The Company, with its strong foundation of resources and human capital, is in an attractive position to be a key player in 2019 and beyond.

10 “Nutraceuticals Market Size Worth $578.23 Billion By 2025. Grandview Research. December 2017. 11 “The Global Skincare and Dermatology Market from 2018 to 2028.” MarketResearch.com, 2019. 12 “Global CBD Oil Market Analysis - Size, Trends and Forecast 2018-2022.” Technavio, 2018. 13 “Biotechnology Market Worth $727.1 Billion By 2025.” Grand View Research, 2017.

VEDA BIOPHARMA BUSINESS PLAN

2 Corporate Overview VEDA BIOPHARMA MANAGEMENT

2.1 MISSION

VEDA BIOPHARMA’S MISSION IS TO COMBINE NATURAL PLANT-BASED THERAPIES WITH MODERN SCIENCE TO

empower, embolden & enhance human lives. 2.2 CORPORATE DATA Name of Incorporation

Veda BioPharma S.A. de C.V.

Date of Incorporation

October 24, 2018

Incorporation Number

VBI1810248R1

Address of Incorporation

Bosque De Robles 117, Bosque de Las Lomas, Miguel Hidalgo, Mexico City, Mexico 11700

Website

vedabiopharma.com

Legal Counsel

To be added.

Accounting

To be added.

Chief Executive Officer

Davide Tomassini

VEDA BIOPHARMA BUSINESS PLAN

VEDA S A N S K R I T

(Sacred) Knowledge Vedas (Sanskrit: “knowledge, wisdom”) are among the oldest sacred texts originating in ancient India around 1700 BCE. Hindus consider the Vedas to be apaurušeya, or “not of a man, but superhuman.” Véda is derived from the root vid- “to know,” and the word has been used in various contexts throughout history. For example, in hymn 10.93.11 of the Rigveda, veda meant “obtaining or finding wealth,” while in other contexts, veda meant “a collection of grass” for ritual fires and other purposes.

VEDA BIOPHARMA BUSINESS PLAN

2.3 MANAGEMENT DAVIDE TOM ASSINI / Chief Executive Officer Davide Tomassini is an entrepreneur born in Florence, Italy. Mr. Tomassini completed his studies at the University of Florence, and has launched several business successfully in the United States and Latin America. At the age of 22, he moved to the U.S. hired to take on the role of General Manager, and later President, of fashion apparel company Aneres LLC, owned by champion tennis player Serena Williams. Since 2006, Mr. Tomassini has been involved in overseeing high-profile investments in the U.S. and Latin America (e.g. Panama, Ecuador, Brazil, Colombia, Argentina and more.) He is a shareholder of Capri, a venture capital firm, as well as NC Capital, an asset management company based in Panama. Davide is also a shareholder of restaurant chain Salvaje, which operates five locations in different countries. Since 2008, he has been working with the Kiwanis Foundation to help raise funds to build schools for unprivileged children, and in 2013 he founded BIG Foundation, a non-profit organization for the education of orphan kids in the world. For the last several years, Mr. Tomassini has been actively involved in the cannabis industry, participating in seminars and attending conventions globally.

PATRIC K B RAU C KM ANN / Director For two decades, Patrick Brauckmann has identified, structured and financed numerous private and public companies in a wide spectrum of industry sectors including health care, internet telephony, solar energy, oil & gas, mineral exploration and licensed production in the U.S. and Canadian cannabis markets. Mr. Brauckmann received his B.A. (Hons) from Simon Fraser University and has served in both management and Board capacities within the international capital market sector, with transactional value in the hundreds of millions in the past decade. Mr. Brauckmann brings strong cross-sectional talents to the Company from his experience as the cofounder of Healthworks, Canada’s first multi-disciplinary medical facilities, the co-creator of Chopra Yoga Studios, and the founder of Corazon Gold Corp. Mr. Brauckmann is Managing Director of a private investment fund focused on the cannabis and hemp CBD sectors, managing interests in U.S. based, Koios Beverage Corp, State of Maryland based producer Culta Cannabis, Denver and Portland based retailers, Doctors Orders, and Oregon based producer Trellis Farms. In 2018, Mr. Brauckmann advised and financed Canadian cannabis producers, Abcann Medicinals and Doja Cannabis Co. while also sitting as a founding board member of Doja. In 2018, Doja acquired retail brand Tokyo Smoke resulting in Hiku Brands. In August 2018, Canopy Growth, the world’s largest cannabis company, acquired Hiku for an amount in excess of $400 million.

AB E LARDO M ONROY / Director With a diverse portfolio, Abelardo Monroy has successfully ventured in multiple markets and industries, including health and lifestyle. His participation in emerging sectors has always had a clear goal: to innovate and enhance the performance of his companies and make them disruptive and highly competitive.

VEDA BIOPHARMA BUSINESS PLAN

Mr. Monroy’s understanding of Mexican markets and consumer behavior trends provides him with a thorough overview of the business opportunities and advantages the country has to offer. Mr. Monroy contributes the knowledge and understanding needed to counsel the Company towards successfully accomplishing its business goals. Mr. Monroy sits on the Executive Committee of the Board of Directors, as well as in the Steering Committee and Business Committee of several other companies. AB RAHAM B E LTRÁN TINO C O / Director of Regulatory Compliance Abraham Beltrán Tinoco joins the Veda team with a decade of experience and a deep understanding of the Mexican regulatory environment. From 2009 to 2017, Mr. Tinoco served as Federal Commissioner Advisor for the Ministry of Health in Mexico City, responsible for protecting and promoting public health and safety. In 2014, Mr. Tinoco also acted as the Food and Beverage Labeling Coordinator for the Ministry of Health. Abraham Tinoco studied medical sciences at the Johann Wolfgang Goethe-Universität in Germany, and later received his medical degree from Universidad Anáhuac del Norte in 2010.

2.4 JOINT VENTURE PARTNERSHIP Veda BioPharma is a joint-venture partnership between Pasha Brands, a Canadian cannabis powerhouse with multiple subsidiaries operating in various segments within the cannabis sector, and InterMed, a Mexican pharmaceutical distribution company operating across eight subrogated states in the Mexican republic. The two companies have entered into a JV agreement in an effort to capitalize on their respective strengths and effectively serve the Mexican and Canadian markets.

2.4.1 Pasha Brands Pasha Brands is a brand house which owns several prohibition-era cannabis production brands. Members of the Pasha Brands family include: • • • • •

B.C. Craft Supply Co. (“BCCS”), a final-stage applicant under Health Canada’s regulations to become a processor and seller of cannabis products; Beard Brothers Collective, a non-profit dispensary dedicated to enhancing quality of life through affordable access to high-quality medical cannabis products; 420 Consulting, a cannabis compliance and consulting firm; Pacific Northwest Garden Supply, an industry pioneer in hydroponics equipment, supporting craft cannabis operations for 20+ years; and CBD Therapeutics, a BC-based manufacturer and purveyor of certified solvent-less CBD products.

Pasha Brands currently has eight pending trademarks for: Pasha Brands, BCCS, Beard Brothers, Aurion Industries, Theraveda Cannabis and CBD Therapeutics – the latter of which will be sold by Veda BioPharma. Pasha Brands’ product lines are distributed to medical patients, as well as to the provincial government cannabis boards across Canada.

VEDA BIOPHARMA BUSINESS PLAN

2.4.2 InterMed InterMed is a Mexico City-based pharmaceutical distribution company operating across eight subrogated states in the Mexican republic. Empowering consumers to take control of their health, the company prides itself on servicing its network of 15+ million patients quickly and effectively. InterMed is committed to (i) the safety and quality of consumers’ medications, (ii) reliability of all prescriptions, (iii) systemized warehouses and use of cutting-edge technology, (iv) certified processes, and (v) a guaranteed voucher system for patients. Currently, InterMed employs over 4,000 people, generating an additional 3,000 indirect jobs. The company continues to grow and leverage new technologies, expediting dispensing services to hospitals and increasing efficiencies in its operations.

AS INTERMED MOVES FURTHER AHEAD OF THE C URVE WITH ITS COMMITMENT TO INNOVA TIVE TECH NOLOGIES AND ITS NETWORK OF 15+ MILLION PATIENTS,

the JV partnership with a Canadian cannabis power-house propels Veda BioPharma forward, FORGING A DISTINCT ADVANTAG E OVER COMP ETITORS S EEKING TO ENTER TH E CANNABIS MARKETPLACE IN MEXICO .

2.5 BUSINESS MODEL Veda BioPharma will employ a vertically-integrated business model wherein the Company will establish and secure multiple revenue streams across the full spectrum of cannabis-based solutions, including cultivation, manufacturing, distribution and retail. The Company holds 100% ownership of CBD Therapeutics, Jane and iCBD brands of cannabis (hemp) products. Veda’s management team has the ability to market products through multiple sales channels including traditional wholesale/distribution and retail markets, private labeling for direct marketing clients and chain retailers, as well as online digital marketplace channels.

VEDA BIOPHARMA BUSINESS PLAN

3 Product Lines HEMP-DERIVED CBD PRODUCTS

3.1 PRODUCTS OVERVIEW Harnessing a wealth of industry experience, Veda BioPharma seeks to produce and distribute highquality cannabis products. In its initial stage of development, the Company will focus on hemp cultivation for the production of CBD products. While often used synonymously, hemp and marijuana are different. The two come from the plant Cannabis Sativa, but with varying amounts of THC. In Canada, hemp is defined as products of Cannabis Sativa that contain less than 0.3% THC, whereas the United States’ defines hemp as all parts of any Cannabis Sativa plant containing no psychoactive properties (except for defined exceptions) naturally produced in the human body by the human endocannabinoid system. H EM P AN D MA RIJUA NA D IFFEREN TIA TION Hemp

Marijuana

THC Concentration

Low (Less than 0.3% THC)

High (Between 5% and 30%)

CBD Concentration

High

Low

Psychoactive

Yes

Growing Strategy

Outdoor row crop or greenhouse. Normally seeded, but cloning possible for CBD

Normally indoor or greenhouse. Commonly cloned.

Products

CBD extracts, health foods, cosmetics, composites, building materials, plastics, industrial oils, paper, textiles

Leafy material, THC extracts, CBD extracts, other finished marijuana products (edibles, beverages, etc.)

VEDA BIOPHARMA BUSINESS PLAN

3.2 CANNABINOIDS Cannabis is a complex plant with over 500 small molecule chemicals of which more than 113 are phytocannabinoid compounds. Among these are THC and CBD, which are the most prevalent and most well-understood. Over the years, more light has been shed on the lesser known cannabinoids, which also offer many health benefits. These include: Cannabigerol (“CBG”), Cannabinol (“CBN”), Cannabichromene (“CBC”) and Tetrahydrocannabivarin (“THCV”). Cannabinoids are also found and naturally produced in the human body. In fact, endorphins from a simple jogging exercise are actually caused by cannabinoids. A study conducted by researchers at the University of Heidelberg medical school in Germany found that:

CBD

THE "RUNN ER'S HIGH" EXPERIENCED BY JOGGERS IS ACTUAL LY CAUSED BY THE SELF-P RODUCED CANNABINOIDS,

similar to those found in the Cannabis Sativa plant14. 3.2.1 Medicinal Uses of Cannabis The earliest use of cannabis dates back to 26,900 BC, with a hemp rope having been found in Czechoslovakia in 1997. For thousands of years, cannabis had not only been legal, but played an important role in various cultures, holding commercial, spiritual and medicinal value – the latter of which had been a prevalent query for researchers in the past decade. In January 2017, The National Academies of Sciences, Engineering and Medicine released a comprehensive report studying the medicinal effects of cannabis, having conducted over 10,000 studies and arriving at 100 conclusions.15 The report had the following key findings: • • •

The report found substantial evidence that cannabis can be an effective treatment for chronic pain, which could have both to do with CBD as well as THC. Cannabis may increase cerebral blood flow and reduce the risk of stroke and/or blood clots. Cannabis may be helpful in controlling epileptic seizures.

The report concludes by encouraging more research on cannabis and its medicinal benefits. As more consumers, policy makers and medical professionals become more inquisitive about cannabis, and subsequently more tolerant and legally lenient, the opportunity for R&D ventures and scientific operations becomes that much more abundant.

14 “5 Things That Are Chemically Similar to a Cannabis High” Leafly, 2016. 15 “The Health Benefits of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for Research.” The National

Academies of Sciences, Engineering and Medicine, 2017.

VEDA BIOPHARMA BUSINESS PLAN

Many researchers continue to explore the possible uses of THC, CBD, and the other 100+ cannabinoids found in cannabis for medical purposes. For instance, recent studies have shown that marijuana extracts may help kill certain cancer cells and reduce the size of others. 16 Research has also shown that treatment with pure extracts of THC and CBD, when used with radiation, increased the cancer-killing effects of radiation. Scientists have conducted pre-clinical and clinical trials with cannabis and its extracts to treat symptoms of illness and other conditions such as diseases that affect the immune system, including HIV/AIDS, MS, inflammatory conditions, pain, seizures, substance use disorders and mental disorders. There has also been a growing interest in CBD to treat certain conditions like childhood epilepsy, a disorder that causes children to have violent seizures.

3.2.2 Health Benefits H EAL TH EFFECTS OF SEL ECT CAN NA BIN OIDS CBG-A

CBG

CBC-A

CBC

CBD-A

CBD

CBN

Health Effects of Cannabinoids

Benefits

Pain Relief

Analgesic

Reduces Inflammation

Anti-Inflammatory

Stimulate Appetite

Appetite Stimulant

Reduces Vomiting and Nausea

Antiemetic

Relieves Anxiety

Anxiolytic

Tranquilizing/Psychosis Management

Antipsychotic

Reduces Seizures and Convulsions

Antiepileptic

Suppresses Muscle Spasms

Antispasmodic

Aids Sleep

Immunosuppressive

Reduces Blood Sugar Levels

Anti-diabetic

Treats Psoriasis

Antipirate

Reduces Risk of Artery Blockage

Anti-ischemic

Kills or Slows Bacteria Growth

Anti-bacterial

Treats Fungal Infection

Anti-fungal

Inhibits Cell Growth in Tumors/Cancer

Anti-proliferative

Promotes Bone Growth

Bone-stimulant

16 “Marijuana as Medicine.” National Institute on Drug Abuse, 2018.

VEDA BIOPHARMA BUSINESS PLAN

3.3

VEDA CBD PRODUCTS

Veda BioPharma seeks to capitalize on the growing global and national hemp markets by growing and harvesting hemp for oils and extracts for pharmaceuticals, consumables and personal care products. Veda will commence operations with three distinct product lines: CBD Therapeutics, Jane HandCrafted CBD and iCBD. All three product lines feature distinctive applications for CBD, ranging from edible products to aid in pain or stress relief (the global targeted pain relief market was valued at $7.5 billion in 2017, and is anticipated to reach $12.3 Billion by 202517), to skincare products targeting both women and the anti-aging market, which is expected to exceed USD $216 billion globally by 202118. According to Statista, revenues generated by skincare in Mexico amount to USD $1.77 billion as of January 2019 – approximately $13.40 spent per person.19 Veda seeks to capitalize on the opportunity presented by the growing market, which is expected to surpass USD $180 billion globally by 2024. 20

3.3.1 CBD Therapeutics CBD THERAPEUTICS Organically-Growth Hemp CBD Products CBD Therapeutics products are formulated by highly-qualified personnel, passionate about product development and complete with an uncompromising tenacity for quality assurance. The entire product line is batch tested by independent third-party Canadian laboratories for cannabinoid & terpene profiles, solvent-free certifications, and microbial contaminant screening. CBD Therapeutics’ focus is on the development of solvent-free, high bio-availability CBD products, producing products that are among the most effective CBD formulations on the market. One of their best products include the Full Spectrum CBD Oil in the form of tinctures and oral sprays. All starting materials are ethically and sustainably sourced, with emphasis on organic options wherever available.

17 “Topical Pain Relief Market by Therapeutic Class, Type, Formulation and Distribution Channel - Global Opportunity Analysis and

Industry Forecast, 2018-2025.” Allied Market Research, 2018. 18 “Anti-aging market - Global Industry Analysis and Forecast 2018-2024.” Market Research Engine, 2018. 19 “Skin care – Mexico.” Statista, 2019. 20 “Skin care market in the U.S.” Statista, 2019.

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3.3.2 Jane Hand-Crafted CBD JANE HAND-CRAFTED CBD Hemp CBD Products for Men and Women Jane Hand-Crafted CBD products feature a line of both edible and topical cannabinoid-rich formulations. Jane is designed to appeal to the modern cannabis consumer, one who values health and therapeutic solutions, product quality and product innovation. In its third report highlight consumer insights in the Canadian cannabis industry, Deloitte notes that edibles and topicals are likely to see the greatest increase in consumption, (59% and 53% of users, respectively21.) Veda’s Jane product line will be designed, produced and packaged to appeal to consumers seeking alterative consumption methods.

3.3.3 iCBD Products ICBD Hemp CBD Products for Women The Global Wellness Institute estimated that in 2018, the global wellness market was worth USD $4.2 trillion – with women controlling about 85% of it22. Furthermore, the Cannabis Consumers Coalition reported that women now use cannabis more than men, with 53% having tried it compared to only 42% of men23. Analysts have linked this trend of women being the fastest growing segment of cannabis users with the influx of CBD-infused wellness products. The iCBD line is designed to target this steadily growing market, with both edible and topical cannabis products. The product packaging (pictured: left) and brand positioning will be tailored to appeal to women, speaking not only to the efficacy of the active ingredients, but to product safety as well – which was reported to be women’s highest priority in cannabis products24, according to the aforementioned Deloitte report.

21 “Canada gets ready for Cannabis 2.0.” Deloitte, 2019. 22 “2018 Global Wellness Economy Monitor.” Global Wellness Institute, 2018. 23 “Consumers Shaping Industry and Policy.” Cannabis Consumers Coalition, 2017. 24 “Canada gets ready for Cannabis 2.0.” Deloitte, 2019.

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4 Industry Analysis OPPORTUNITIES IN CANNABIS MARKETS

4.1 GLOBAL CANNABIS MARKETS In the wake of scientific break-throughs, legislative developments and increasing market traction, the global cannabis industry has climbed in value to reach CAD$16.14 billion in 2018, 25 according to a report by Arcview Market Research. The research company anticipates the market to reach $22.35 billion in 2019, growing by an exceptional 39% growth rate. Estimates of the potential size of the global legal cannabis market range from $150 billion to $500 billion, with the Bank of Montreal (BMO) anticipating a value of $256 billion by 202526, operating under the assumption that cannabis will be recreationally legalized on a federal level in the United States (US) and the European Union (EU). As the cannabis industry climbs along its upward trajectory, significant growth will be attributable to several emerging factors: (i) As the stigma of cannabis use is reduced over time, more consumers will try cannabis; (ii) Medical research is confirming beneficial health effects (e.g. pain relief, anti-inflammatory properties, anxiety control, etc.); (iii) A wide range of new product types, including edibles, beverages, topicals, vaping and derivatives, are appealing to a much wider consumer base and provide more opportunities for consumption; and (iv) There is a rapidly expanding consumer-base with the fastest growing market segments being women and the elderly.

25 “The State of Legal Marijuana Markets 6e – 2019 Update.” Arcview Market Research, 2019. 26 “Legal Marijuana Is a $194 Billion Opportunity, Report Suggests.” The Motley Fool, 2018.

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C OM PA RA BL E GL OBAL MA RKET SIZ ES

ALCOHOL INDUSTRY

NUTRACEUTICALS INDUS TRY

1.3 Trillion27

$383 Billion29

TOBACCO INDUSTRY

PHARMACEUTICAL INDUS TRY

$680 Billion28

$1.1 Trillion30

With the full legalization of cannabis in Canada, Big Tobacco, Pharma and Alcohol are starting to stake positions in this emerging market with huge potential for disruption, including: Altria (Marlboro), Anheuser-Busch InBev, Constellation Brands, Heineken, Molson Coors and Novartis. FMCG giants Coca Cola and PepsiCo have both announced they are actively exploring the possibility of entering with cannabis infused products. Walmart and Whole Foods, the largest organic supermarket chain, also announced the intent to start selling legal cannabis products across North America.

27 Stratistics MRC, 2018. 28 Euromonitor, 2018. 29 “Nutraceuticals – Global Market Outlook (2017-2026)” Research and Markets, 2018. 30 “The Mid-Size Pharmaceutical Market: Market Assessment, Growth Forecasts and Strategic Consolidations for Key Players.” Research

and Markets, 2018.

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4.2 OPPORTUNITIES IN LATIN AMERICA ARE ON THE RISE Latin America is at the forefront of the global wave of cannabis legislation reform. While Canada has legalized cannabis nationwide for medical and adult use (as have 10 states in the United States, with an additional 23 states permitting medical use of cannabis only), there has also been a significant expansion of legal cannabis throughout the Americas as noted by the establishment of primarily legal medical markets in the region. Latin America is home to more than 600 million people, among whom nearly 13 million use cannabis at least annually.31 Recognizing the significant potential opportunity presented by a regulated industry, cannabis businesses within and outside the region are aggressively pursuing import and export opportunities in Latin America to service the $22.35 billion market.32

Mid

High

BRAZIL

CHILE

COLOMBIA

MEXICO

ARGENTINA

$2.14 $1.12

$1.63 $0.67

$0.10

$1.11

$0.31

$2.15

$2.40

$1.54

$0.68

$2.01

$1.91

$1.80

$2.38

$3.37

Low

$0.19

BILLIONS ($USD)

$4.73

ESTIM A TED VAL UE OF L A TIN AM ERICAN MA RKET S

REST OF LATIN AMERICA

Source: New Frontier Data, 2019

According to New Frontier Data’s 2019 report, Brazil has the highest estimated value at $4.73 billion. This is largely due to the fact that Brazil has the highest consumer-base, with 4.2 million consumers annually33. ESTIM A TED N UM BER OF C A NN ABIS CON SUM ERS I N L A TIN A M ERICA N COUN TRIES

IN MILLIONS

4.24

2.64 1.89

BRAZIL

CHILE

1.41

1.40

1.31

COLOMBIA

MEXICO

ARGENTINA

REST OF LATIN AMERICA

Source: New Frontier Data, 2019 31 “The Latin America Regional Cannabis Report: 2019 Industry Outlook” New Frontier Data, 2019. 32 “The State of Legal Marijuana Markets 6e – 2019 Update.” Arcview Market Research, 2019. 33 “The Latin America Regional Cannabis Report: 2019 Industry Outlook” New Frontier Data, 2019.

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Medical cannabis is legal in Brazil, and possession and cultivation of personal amounts have been decriminalized. Despite the increasing number of registered patients, patient access is still determined on a case-by-case basis, which has constrained the pace of the program's nevertheless significant growth. However, proposed changes could significantly expand patient access34. The rest of Latin America has been quickly following suit. In 2014, Uruguay became the first country in the world to legalize adult-use cannabis35, and in February 2019 the country’s regulatory body will begin receiving applications for additional commercial producers to grow cannabis for its pharmacy sales. Furthermore, Colombia is now positioning itself to be a global exporter of medical cannabis derivatives. With its inexpensive cultivation costs, ideal growing conditions, and experienced cultivators, Colombia is expected to produce cannabis at a fraction of the cost of exporters like Canada.

BASED ON RATES OF CA NNABIS USE, ESTIMA TED CONSUMPTION VOLUME, AND REGIONAL PRICES,

New Frontier Data estimates the market value of cannabis in Latin America* at USD$9.8 billion. 36 * Inclusive of legal, regulated and unregulated markets as well as illicit markets. The state of cannabis markets by country varies widely — from import-only/derivative-only, to the elusive exceptional-licenses-to-use markets, to adult-use legal markets where home growers can cultivate plants with up to 15% THC. Many regulations remain undeveloped, even in legal markets, and illicit products are still prevalent. While patients in functioning markets await their registration approvals, and cultivators in soon-to-be regulated markets await pending export regulations, the Latin American region is preparing for a considerable surge in sales of imported and local cannabis seeds, plants, derivatives, and cultivation supplies. Each country in Latin America is in a different stage of its development, and some are closer than others to reaching their policy goals. Latin America will play an increasingly important role in the evolving global cannabis marketplace, and the legal regulated industry will be a catalyst for economic development, job creation, and new opportunities in healthcare and wellness across the region.

34 “Brazil’s push to regulate medical marijuana industry” The Brazilian Report, 2019.

36 “The Latin America Regional Cannabis Report: 2019 Industry Outlook” New Frontier Data, 2019.

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4.3 REGULATION HISTORY IN MEXICO

August 2009 Mexico decriminalizes possession of small quantities of cannabis for personal use.

September 2015 The government grants permission for an 8-year-old girl with a severe form of epilepsy to import and use CBD hemp oil.

January - February 2016 The government begins a series of public debates about Mexico’s prohibitionist cannabis policies. In February 2016, COFEPRIS issues permits for the import of CBD treatments into the country for 2 young girls suffering from LennoxGastaut (LGS) and Dravet syndromes.

April – June 2017 The Mexican Congress legalizes cannabis use for medicinal purposes, specifically allowing for “pharmacological derivatives of cannabis” to be regulated and studied by the Ministry of Health. In June 2017, President Enrique Peña Nieto signs the medical cannabis bill into law.

October 2019 With the expected passage of a cannabis bill into law, Mexico would be the 3rd country to legalize recreational marijuana nationwide.

October 2018 The law prohibiting cannabis use is declared unconstitutional by Mexico’s highest court. The effect of the ruling renders the law generally unenforceable, and the government must act to formally legalize cannabis within 90 days.

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4.4 MEXICAN CANNABIS MARKET With over 132 million inhabitants and an estimated 1.4 million cannabis consumers, Mexico stands to become the third and largest nation to legalize cannabis on a federal level.

4.4.1 Mexican Cannabis Market by the Numbers POPULATION

2018 GDP

# OF CONSUMERS

132.5 Million37

$1.22 Trillion38

1.4 Million39

DECRI MINALIZ ATI ON

ADULT USE*

MEDI CAL USE

*anticipated in 2019

M EXICO CA NN ABIS TOTA L A DDRESSA BL E M A RKET (TA M ) VAL UE ESTIM A T ES

$2,013.6

MILLIONS USD $

$1,905.9

$1,798.2

TAM LOW ESTIMATE

TAM MID ESTIMATE

TAM HIGH ESTIMATE

Source: New Frontier Data, 2019

4.4.2 Market Drivers REGULATORY ENVIRONMEN T While technically legal, the medical program is yet to be thoroughly implemented. The program currently allows for the import of cannabis oils, pills, and foods, so long as they contain less than 1% THC, while more potent THC products are allowed for import with special governmental permission. Medical retail establishments’ rules and regulations are still being developed, and a fully implemented medical retail program is not expected before mid-2019. While adult-use cannabis production and consumption remain technically illegal, the high court ruling made the current regulations unenforceable40. 37 “Mexico Population” Worldometers, 2019. 38 “World Economic Outlook Database, April 2019.” International Monetary Fund, 2019. 39 “The Latin America Regional Cannabis Report: 2019 Industry Outlook” New Frontier Data, 2019. 40 “What We Know About Mexico’s Upcoming Cannabis Legalization.” Biz Latin Hub, 2019.

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Subsequently, a bill was introduced in November 2018 for the Mexican parliament to fully legalize cannabis. Its provisions included: • • • • • •

Creating a Mexican Institute of Regulation and Control of Cannabis to regulate and implement the law; Establishing rules for regulating, monitoring, sanctioning, and evaluating the regulatory system for cannabis; Allowing for personal possession, public consumption, and home cultivation of cannabis; Prioritizing public health and harm reduction over commercial interests; Authorizing the planting, cultivation, harvest, preparation, manufacture, production, distribution and sale of cannabis for industrial use; and Empowering the institute to: o Create guidelines for the granting of licenses, establishing the maximum number of licenses nationwide (and per state) across all license types, and creating regulations regarding retail stores (e.g., zoning restrictions and opening hours); o Determine the maximum and minimum THC and CBD limits; o Establish quality and testing standards; and o Determine the type of products allowed.

CANNABIS CONSUMER BA SE While the cannabis consumption rate is approximately 1.5% among consumers aged 15-65, conservative estimates indicate there to be 1.4 million cannabis users in Mexico, of which 837,000 are regular monthly users. As such, there is significant opportunity to increase tax revenues, employment, and economic development initiatives to support the domestic industry. Apart from the 1.4 million recreational cannabis users, there are abundant opportunities to cater to markets with CBD products, or non-psychoactive cannabis. Approximately 27% of the population, for instance, suffers from chronic pain41, according to Algeria Lara, head of the Pain Clinic of the National Institute of Medical Sciences and Nutrition Salvador Zubirán. These 35.7 million people could benefit from edible and/or topical CBD products, which have been known to provide pain relief. Furthermore, there is a growing, aging population in Mexico; while the median age was 27.9 in 2015, it estimated to increase rapidly to 42 years by 205042. Moreover, the population of residents aged 65 and over is expected to triple to 20.2% of the population by then as well. These are the some of the biggest markets for CBD and CBD products, with studies highlighting the efficacy of CBD products among seniors 43.

ECONOMIC GROWTH Mexico has the fifth-highest per capita GDP in Latin America; however, economic output is largely influenced by the oil industry, and economic growth is concentrated in the northern and central areas of the country. Mexico also has the fifth-largest economy in the region. While the country’s economic growth may not be as robust as Panama’s or Peru’s, it has outperformed other large markets including those of Brazil, Argentina, and Venezuela44.

41 “Chronic Pain: A Silent Epidemic.” Mexico Business Publishing, 2018. 42 “Aging in Mexico: Population Trends and Emerging Issues” The Gerontologist, 2017. 43 “51% Of Seniors That Have Tried CBD Report An Improved Quality Of Life” Forbes, 2019. 44 “The Latin America Regional Cannabis Report: 2019 Industry Outlook” New Frontier Data, 2019.

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4.4.3 Market Opportunities The deployment of medical, adult-use, and industrial cannabis programs may align with both the social and political goals of Mexico while creating many opportunities for entrepreneurs and investors seeking to enter the market.

INTERNATIONAL MARKET PARTICIP ATION Given its geographical location, Mexico is poised for significant participation in the global cannabis marketplace. It enjoys competitive advantages over other South American countries with its favorable soil and climate conditions.

ECONOMIC DEVELOPMENT WHERE IT IS NEEDED High per capita GPD, a large user base, and frequent cannabis usage can foster a solid domestic market while complementing its export market. Moreover, there is an opportunity to drive economic activities into the impoverished, rural areas to increase educational attainment and economic prosperity.

NEED FOR CLARITY OF RESPONSIBILITIES Another key for successful regulatory schemes is defining authority among regulatory agencies. Regulators and other stakeholders (including consumers) will require education in order to understand the risks and benefits of cannabis usage. There is momentum from a legislative perspective for cannabis reform in Mexico. Politically and socially, concerns and objectives are aligned45, suggesting favorable and rapid reforms to occur throughout 2019 and 2020 whether for its medical, adult-use, or industrial cannabis markets. For investors interested in Mexico’s markets, comparative advantages over other Latin American markets exist through considerations of size, economic development, soil, climate, or proximity to other markets.

WITH A STRONG DOMES TIC MARKET COMBINED WITH A LARG E EXPORT MARKET IN A C OUNTRY FA RTHER ALONG IN THE REFORM PROCESS THAN MOST NEIGHBORIN G COUNTRIES,

Mexico represents strong opportunities within the cannabis space.

45 “The Latin America Regional Cannabis Report: 2019 Industry Outlook” New Frontier Data, 2019.

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4.5 CANADIAN CANNABIS MARKET Canada, the first G7 nation to federally legalize recreational cannabis in 201846, serves as an optimal location to continue cannabis operations. In its 2019 report, BMO Capital Markets asserts that Canada has a distinct advantage in international markets due to: (i) Canada’s cultivation expertise (Canadian LP’s will have up to four years’ lead time), (ii) the nation’s first-mover advantage, and (iii) access to capital:

AS OF APRIL 2019, IN VESTMENTS IN CANADIAN CANNABIS -RELATED ENTERPRIS ES (PUBLIC AND PRIVATE)

reached $3.7 billion in 2019 alone47. SUM M A RY OF YEA R -TO-DA TE TRAN SA CTION S Through Week 13 In USD$

2018

2019

Millions

Public Companies

Private Companies

Overall

Equity

Debt

Total

Equity

Debt

Total

Equity

Debt

Total

# of Raises Total Raised Average Raise

140

$2,164.4

$764.9

$2,929.3

$622

$227.5

$849.5

$2,786.4

$992.4

$3,778.8

$34.9

$23.2

$30.8

$18.3

$20.7

$18.9

$29

$22.6

$27

# of Raises

115

143

173

Total Raised

$1,354.4

$474.8

$1,829.2

$504.6

$118.6

$623.3

$1,859

$593.4

$2,452.4

Average Raise

$14.1

$25

$15.9

$10.7

$10.8

$10.7

$13

$19.8

$14.2

Source: Viridian Capital Advisors, April 2019.

Statistics Canada released a report that estimated annualized household spending on cannabis to total $5.9 billion in 201848, with the black market accounting for $4.7 billion49 or almost 80% of the market. In 2019, Canadian spending is forecasted to reach $7.2 billion50, with a 22% growth rate.

46 “Cannabis in Canada.” Government of Canada, 2019. 47 “Summary of Year-to-Date Transactions.” Viridian Capital Advisors, 2019. 48 “Cannabis producers could be chasing global market worth $194 billion in seven years: BMO report.” Financial Post, 2018. 49 “Canadians spending $5.9B on pot, mostly from black market.” BNN Bloomberg, 2019. 50 “A Society in Transition, an Industry Ready to Bloom: 2018 Cannabis Report.” Deloitte, 2018.

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The potential market size of that Canadian cannabis market is estimated to exceed $20 billion in the coming decade as it comes line with current national spending on alcohol and tobacco at $22 billion51 and $18.7 billion52, respectively. FA C TORS DRIVIN G GROW TH •

There is a rapidly expanding consumer base due to de-stigmatization, proven medical benefits and new product development.

•

A wide range of new cannabis products are currently being developed in anticipation of the scheduled legalization of edible, beverage and combustible oil products in October 2019 by the Government of Canada.53

•

New scientific discoveries, such as water solubility and powders, will further driving new product development in the infused-cannabis categories.

•

In turn, nano-emulsification and micro-dosing will further expand the consumer base and increase the frequency of use by making effects more controlled.

•

Many global players are beginning to heavily invest in Canada’s cannabis sector, solidifying the country’s role as the world leader in cannabis innovation and development.

•

Accordingly, Canadian companies are set to dominate the global cannabis marketplace for the foreseeable future. As such, many export channels will be available for Canadian producers. For example, Canadian dried flower now has access to 22,000 pharmacies across Germany.54

4.5.1 Hemp Cultivation Hemp-derived CBD holds a significant share of the cannabis market in Canada, with analysts and experts anticipating CBD to overtake marijuana sales in terms of annual revenues 55. In fact, Canada has quickly become the global leader of hemp cultivation. In 2017, 137,000 acres of land was designated for hemp cultivation in the country56, the largest amount of acreage for hemp cultivation by a nation worldwide.

Acreage in thousand acres

A C REA GE FOR H EM P CUL T IVA TION WORLDWIDE IN 2017 150 100 50 0 Canada

China

France

United States Estonia

Italy

Lithuania Netherlands Germany

Source: Hemp Business Journal, Health Canada, New Frontier Data, FAO, EIHA, Vote Hemp 51 Stratistics MRC, 2018. 52 Euromonitor, 2018. 53 Health Canada, 2019. 54 “CanniMed Targets German Medical Cannabis Market with Fagron Partnership.” Cannabis Business Ventures, 2018. 55 “Blooming Demand for CBD is Making Hemp the Cannabis Cash Crop.” Bloomberg, 2019. 56 “The Global Hemp Industry Outlook 2019.” New Frontier Data, 2019.

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Industry analysts and professionals alike are enthusiastic about new legislation in the Cannabis Act that will allow the Canada’s hemp producers to compete in more diverse markets – with a primary focus on CBD. On Aug. 10, 2018, Health Canada approved the use of the whole hemp plant with sales authorized beginning on October 1757 with implementation of the Cannabis Act. Under the new regulations, Canadian cannabis Licensed Producers (LPs) are able to purchase flowers and leaves from hemp producers, extract CBD, and develop products to sell into the newly created adult-use market. In anticipation of the regulatory changes, there has been a boom in M&A activity in Canada, as LPs cut deals to create alliances with hemp producers to establish efficiencies and reduce costs in their supply chains. One example includes Canopy Growth Corp.’s purchase of Mettrum Health Corp.58, a hemp cultivator and player in the medical cannabis and hemp functional food categories, as well as the company’s acquisitions of Green Hemp Industries59, a Saskatchewan hemp farm operator, and ebbu60, a Colorado research and development company. 2018 REGISTERED H EC TA RA GE FOR H EM P C UL TIVA TION BY APPROVED CUL TIVA R Approved Cultivar Total

Hectarage (HA) AB

PEI

Total

12,142

215.4

4,674

402.8

34.8

1,402

144.3

1,546

10,975

31,537

Source: Health Canada

According to industry professionals, a successful hemp crop yield could lead to 10 and 15 pounds of CBD per acre.

WITH CANADIAN GROWERS HAVING 137,000 ACRES IN 201 7,

an estimated 1.37 million to 2.055 million pounds of CBD can be produced.

57 “Health Canada creates exemption for hemp farmers to harvest flower.” Hemp Industry Daily, 2018. 58 “Press Release: Canopy Growth and Mettrum Announce Closing of Acquisition.” Canopy Growth Corporation, 2017. 59 “Press Release: Canopy Growth Extends its Industry Leading Hemp Position.” Canopy Growth Corporation, 2017. 60 “Press Release: Canopy Growth completes ebbu asset acquisition.” Canopy Growth Corporation, 2018.

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4.5.2 Cannabis Consumption L EGAL RETA IL REC REA T IONA L SAL ES IN TH E F IRST QUA RTER FOL L OWIN G FEDERA L L E GA L IZ A TION (OCT. 17 – JA N . 31) $16 Cannabis Retail Sales (in Million CAD$)

$14 $12 $10 $8 $6 $4 $2 $0

Atlantic

Alberta Oct.

Nov.

Quebec Dec.

Jan.

Ontario

British Columbia

Source: BMO, April 2019

BMO believes that the presence of more bricks and mortar retail stores in Alberta and the Atlantic Provinces may have contributed to stronger sales in Ontario and British Columbia.61 Furthermore, BMO speculates that the Atlantic Provinces have some of the highest prices in the country, which may have incentivized LP’s to supply those provinces, resulting in more product availability for consumers to purchase. SUM M A RY OF Q4 2018 R ESUL TS (in Million CAD$, except for selling prices) Aurora

CannTrust

Canopy

Cronos

HEXO

OrganiGram

Total Revenues

$54

$16

$83

$13

$12

Recreational Revenues

$22

~$4

$58

~$3

$12

Total Volume Sold

6,999

3,407

10,102

1,040

2,689

2,053

Recreational Volume Sold (kg)

3,807

~1,100

8,287

~650

2,537

1,832

Overall Avg. Selling Price ($/gram)

$6.80

$4.74

$7.33

$5.39

$4.97

$5.48

$5.67

~4.00

$6.96

~$5.00

$4.81

$5.04

Cost of Production ($/gram)

$3.46

$3.08

$6.41

$3.02

$2.42

$1.61

Gross Margin

52%

35%

22%

44%

52%

71%

EBITDA

($40)

($9)

($77)

($8)

($5)

4,816

7,556

4,938

~8,000

11,359

~20,000

2,311

~4,000

~16,000

Recreational Avg. Selling Price ($/gram)

Volume Harvested (kg) Inventory at Quarter End (kg)

Sources: Company filings, Health Canada, BMO Capital Markets (2019)

61 “Cannabis Coverage.” BMO Capital Markets, 2019.

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BM O’ S TWO -YEA R OUTL O OK Year 1

Year 2

Medical

end Oct/19

end Oct/20

YoY

Number of Patients

330,000

350,000

240

79,200

84,000

5.6

539,304

25%

50%

134,826

269,652

0.4

1.0

Est. Legal Volume (New Users) (kg)

21,840

50,960

133%

Est. Annual Legal Volume (kg)

156,666

320,612

105%

Est. Total Legal Volume: Medical + Adult-Use (kg)

235,866

404,612

72%

Avg. Grams per Patient per year Est. Annual Volume (kg)

Adult-Use Est. Illicit Market Users (mm) Est. Illicit Volume (kg) Illicit Market Displacement * Est. Legal Volume (Illicit Users) (kg) Est. New Users (mm)

100%

* The percentage of the illicit market that will transition to the legal market. Source: BMO Capital Markets 2019

4.5.3 Impacts of Evolving Regulations The Government of Canada has approved the scheduled legalization of edible, beverage and combustible oil products in October 2019.62 With the introduction of new, alternative cannabis products, consumer participation in the market, and subsequently product demand, will evolve alongside regulations. This is especially notable for companies who specialize in alterative consumption products (i.e. not dried flower.) In its third report assessing consumer behaviour, Deloitte posits that edibles will prove to be a more successful segment in Canada, as the product is more accessible to greater markets (i.e. the aging population, as well as consumers who appreciate edibles’ discreetness and lack of surrounding stigma.) Edibles are also said to be a more profitable product line for retailers, who will also be able to leverage a wide assortment of edibles to provide the customer experience consumers crave and differentiate themselves in the market. As producers and retailers bring more edibles to market over time, they will capture an ever larger share of consumer spend—and contribute to a shrinking illicit market.

62 Health Canada, 2019.

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USE OF A L TERNA TIVE C A NN A BIS -IN FUSED PROD UCTS By Current and Likely Consumers CBD *

37%

Hybrid

40% 36%

Sativa

40% 35%

Indica

39% 34%

Hash

20%

Honey oil / Hash oil

14%

THC-A

Budder Honeycomb / Crumble Wax THE Rosin

Current User

CONCENTRATES Anticipated User Current User

39%

20% 17%

Kief

Live Resin

Anticipated User

30%

17%

Shatter

Distillate

CAPSULES

25% 25%

CBN

Bubble hash / Full melt

50%

22%

9% 8% 8% 6% 6% 4% 4%

Oral Sprays * Tinctures * Breath strips and slow release pouches

Anticipated User Current User

26%

11% 9%

T INCT URES

21% 21% 21% 22% 24% 23% 17%

17%

43% 42% 36%

62% 56% 61%

% of respondents currently using or are likely to use at least every 3 months Source: Deloitte, 2019.

* Denotes products anticipated to be sold by Veda BioPharma.

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4.6 THE CBD MARKET In 2016, Forbes boldly predicted the cannabidiol market to grow by 700% by 2020.63 Following the milestones of the cannabis industry, namely the federal legalization of cannabis in Canada 64, Uruguay65, and the successful passing of the U.S. 2018 Farm Bill (federally legalizing hemp) and its subsequent regulatory developments66, both marijuana and hemp cultivation drive the CBD market forward.

Reports & Data released a new report in May 2019 predicting the market to reach USD$16.32 billion by 202667, AN ASTRONOMICAL JUMP FROM THE $1.04 BILLION MARKET IN 20 18.

4.6.1 LP’s CBD Strategies In response to the rapidly-accelerating growth of the CBD market, Canadian Licensed Producers are developing and optimizing their domestic and international production and distribution strategies. A few notable strategic directions are outlined below: CA NA DIA N L P’ S A RE DE VEL OPIN G TH EIR IN TER N A TION AL CBD STRA TEG IES

Company

Announced Transactions

Aurora

Australis invested in Folium Biosciences, the largest vertically integrated producer of hemp-derived cannabinoids in the U.S. (Aurora holds warrants in Australis that are exercisable when Australis operations become legal under U.S. regulations.)

Canopy

Acquisition of Ebbu, a Colorado-based hemp research company. Canopy also announced its license approval to grow and process hemp in NY state. Furthermore, the company solidified a brand partnership with Martha Stewart.

63 “The Cannabis Market That Could Grow 700% By 2020.” Forbes, 2016. 64 “Cannabis in Canada.” Government of Canada, 2019. 65 “Uruguay: The world’s marijuana pioneer” BBC News, 2019. 66 “USDA: Yes, You Can Transport Hemp Across State Lines.” Cannabis Business Times, 2019. 67 “Cannabidiol (CBD) Market Form, Routes of Administration, Product, Application, Source and End User - Global Forecast 2026.” Reports

& Data, 2019.

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Company

Announced Transactions (Continued)

HEXO

HEXO announced a joint-venture agreement with Molson Canada to develop THC and CBD beverages.

Tilray

Tilray announced a supply agreement with Livewell to purchase hempderived CBD isolate in both Canada and the U.S. The company also has a revenue-sharing agreement with Authentic Brands Group to market and distribute cannabis products, and a research partnership with AB InBev to develop THC and CBD beverages. Tilray also acquired Manitoba Harvest, the world's largest hemp food company.

Source: BMO Capital Markets, 2019.

4.6.2 CBD Usage and Medical Conditions For years, consumers and producers alike have become increasingly aware of the health and medicinal benefits of CBD products. Market research firm Brightfield Group, LLC partnered with HelloMD, a digital healthcare platform in the cannabis industry, to collect data of users, assess the growing industry and analyze consumers of medical cannabis, particularly CBD. M OTIVA TION FOR CON SU M PTION OF CBD Help connect with others To heighten senses Improve sex life Meditate/spritual reasons

To help concentration Increase creativity Make activities interesting Improve mood To have fun with friends

Reduce stress/anxiety Relax or aid sleep 0%

10%

Source: Brightfield Group, 2018.

VEDA BIOPHARMA BUSINESS PLAN

20%

30%

40%

50%

60%

TOP TEN M EDICAL C ON DITION S REPORTED BY CBD CON SUM ERS PTSD

13%

ARTHRITIS

24%

NAUSEA

27%

SEVERE OR CHRONIC PAIN

28%

MUSCLE TENSION OR STRAIN

34%

MIGRAINES

34%

JOINT PAIN & INFLAMMATION

48%

DEPRESSION

49%

INSOMNIA

63%

ANXIETY

71%

Source: Consumers Reports, 2019.

4.6.3 Aggregate Demand for CBD Products The aggregate demand for CBD products among users with chronic pain is over $38 billion in Mexico and $21 billion in the United States (as shown below.) This does not include users with other medical conditions, such as mood disorders or cancers.

UNITED STATES

MEXICO

CANADA

Residents with Chronic Pain

35.7 Million

Residents with Chronic Pain

19.6 Million

Residents with Chronic Pain

6 Million

Aggregate Demand

$38.5 Billion

Aggregate Demand

$21.17 Billion

Aggregate Demand

$6.48 Billion

Pounds of CBD Required

425,007

Pounds of CBD Required

233,337

Pounds of CBD Required

71,430

Assumptions: $0.20/mg; 453,592 mg per oz. Sources: New Frontier Data (2019), Institute for Health Metrics and Evaluation (2018), Statistics Canada (2019.)

VEDA BIOPHARMA BUSINESS PLAN

4.6.4 Nutraceuticals and Wellness Markets The increasing prevalence of diseases such as high blood pressure, obesity, diabetes and cholesterol, as well as the increasing demand from developing economies, is expected to further boost product demand across the nutraceuticals and wellness markets:

ACCORDING TO A REPORT BY GRAND VIEW RES EA RCH,

the nutraceuticals product market revenue is expected to reach $578 billion by 2025.68 The market is driven by factors such as the growing health consciousness & increased life expectancy among consumers, rising cases of chronic diseases, widening applications of nutraceutical ingredients, and emerging technologies in food processing to upgrade the nutritional benefits of food products. The global demand for nutraceutical ingredients is increasing significantly, especially in the Asia Pacific and European regions. The increase in consumer shift from synthetic food products to organic and herbalbased products is one of the major factors driving the use of phytochemical and plant extracts in these regions. GL OBAL N UTRA CEUTICAL S M A RKET H IGHL IGH TS •

Dietary supplements segment is expected to ascend at a CAGR of over 9.7% from 2017 to 2025 on account of rising product demand from Brazil, China, India, South Korea, Poland, and Mexico.

•

Botanical dietary supplements segment is anticipated to witness considerable growth over the forecast period on account of increasing popularity of nutraceuticals with natural ingredients. Low cost as compared to prescription drugs and easy availability are factors expected to augment their demand over the next eight years.

•

North America nutraceuticals market is a mature market and is likely to progress at a CAGR of over 7.8% from 2016 to 2024. Increasing utilization of functional food and beverages by the baby boomer population in North America is expected to augment market growth over the forecast period.

4.6.5 CBD Beauty Markets The consumer applications for CBD products vary widely and are not exclusive to oral consumption; the skincare and beauty markets provide a considerable opportunity. A report from Group LLC estimates that the CBD beauty products market will reach $25 billion globally by 202969. The report also points out that it anticipates new CBD beauty products to replace sales of existing non-CBD products, rather than enlarging the beauty market beyond already expected growth. In addition, the report notes that online searches for CBD beauty products have risen by 370% since the beginning of 2019.

68 “Nutraceuticals Market Size Worth $578.23 Billion By 2025. Grandview Research. December 2017. 69 “On a high: the rise of cannabis skincare” Financial Times, 2019.

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“

The human body has an incredible biological affinity to this plant, and when it comes to wellbeing through ingestion or topical application, the use of quality, whole-plant extracted CBD can have hugely beneficial anti-inflammatory, calming and protective effects on our skin.” – ALEXIA INGE, CO- FOUNDER OF CULT B E AUT Y

VEDA BIOPHARMA BUSINESS PLAN

5 Competitive Landscape IDENTIFYING VEDA’S COMPETITIVE EDGE

5.1 COMPETITIVE ANALYSIS 5.1.1 Canadian Vertically-Integrated Companies CANOPY GROWTH TSE: WE ED Canopy Growth intends to expand globally through the development of vertically integrated supply chains in major markets that legalize medical cannabis, as the company believes these countries will eventually pursue recreational legalization. Their strategy includes investing heavily in R&D and manufacturing capacity to develop value-add products, with a particular focus on cannabis beverages, as well as building upon its strategic partnership with Constellation Brands.

AURORA TSE: AC B One of the more acquisitive LPs in the sector (which will require significant integration efforts), Aurora’s strategy includes investing heavily in sky-class facilities (highly automated, large-scale hybrid greenhouses.) Aurora is also one of only a handful of Canadian LPs with a first mover status in international markets, including Germany.

CANNTRUST HOLDINGS I NC. TSE: TR ST CannTrust is one of the more notable companies in the Canadian medical market, with over 60,000 patients. The company has a differentiated approach to greenhouse cultivation through the use of smaller rooms, which should allow for better environmental control. CannTrust’s strategy moving forward is to develop an outdoor grow facility on 200 acres of land for low-cost extract products. Currently, the company has limited presence in international markets – CannTrust has invested in earlystage producers in Denmark and Australia.

VEDA BIOPHARMA BUSINESS PLAN

C A NA DIA N M A RKET COM P A RA BL ES Share Price

Current EV / FY 2020E

CAD$ MM

31-Mar-19

Market Cap

Revenue

EBITDA

Last Q Volume Sold (kg)

Canopy Growth

$52.82

$27,892

$18,086

13.6x

76.6x

10,102

Aurora Cannabis

$12.09

$13,120

$12,945

14.9x

43.9x

6,999

Cronos Group

$24.55

$10,647

$6,755

23.4x

72.9x

1,040

Tilray

USD$65.52

USD$6,703

USD$6,690

17.2x

69.7x

2,053

Aphria

$12.46

$3,181

$3,010

2.6x

13.2x

3,409

HEXO

$8.83

$2,559

$2,212

6.9x

21.2x

2,689

TGOD

$4.82

$1,512

$1,182

3.1x

13.9x

n/a

OrganiGram

$9.00

$1,429

$1,307

7.4x

17.4x

2,245

CannTrust

$10.36

$1,180

$1,046

5.3x

19.2x

3,407

Village Farms

$18.74

$953

$986

3.6x

13.2x

n/a

Flowr Corporation

$6.34

$840

$815

8.6x

28.1x

n/a

Supreme Cannabis

$2.20

$824

$696

5.1x

31.1x

~1,245

Emerald Health

$4.04

$625

$548

44.5x

nmf

n/a

Aleafia Health

$1.90

$633

$585

nmf

n/a

Wayland

$0.80

$206

$151

nmf

Company

Source: BMO Capital Markets, Inc.

5.1.2 Cannabis-Related Companies in Expanding into Mexico There are several cannabis companies that have announced expansion to Latin America, and Mexico in particular. Among them is Khiron Life Sciences Corp. (TSX-V: KHRN), a Canadian integrated medical cannabis company with its core operations in Colombia. According to a press release from May 2018, Khiron has strategically positioned itself to enter the medical cannabis market in Mexico by acting as a key sponsor of the CannaMexico World Summit. Former Mexican president Vicente Fox also sits on the board for the company. Additionally, PharmacCielo (TSX-V: PCLO) announced a joint-venture with Mexico-based Mino Labs, and intends to export cannabis oils and other derivatives as early as Q4 2019. CannaOne Technologies (CSE: CNNA), a Canadian company that develops digital tools to service various segments for the cannabis industry, with its flagship product BloomKit, is also taking advantage of this new southern market potential. The company entered into a formal agreement with Manna Health Services S.A. de C.V. of Mexico City, to undertake the development, launch, and operation of an industry-leading, online CBD product purchase and delivery marketplace for the Country of Mexico.

VEDA BIOPHARMA BUSINESS PLAN

5.2 COMPETITIVE ADVANTAGE Veda BioPharma has a distinct advantage over other active players in the market through its strategic partnership between two key distribution power-houses. In Mexico, InterMed has access to over 1,000 pharmacies and caters to a network of over 15 million patients. In Canada and the United States, Pasha Brands is fully-licensed and has a formal agreement with Southern Glazer's Wine & Spirits. Pasha also provides a trademarked product line, as well as access to both its own Licensed Producer subsidiary and micro-cultivation partners.

THESE KEY ACTIVITIES STRA TEGICA LLY SPREAD THROUGHOUT TH E CANNABIS SUPPLY CHAI N PROPEL VEDA BIOPHA RMA FORWARD AHEAD OF THE COMPETI TION, AND POSITIONS THE COMPANY TO CAPTURE A SUBSTANTIA L SHARE OF THE MARKE T.

VEDA BIOPHARMA BUSINESS PLAN

6 Marketing Plan SALES AND MARKETING STRATEGIES

6.1 DISTRIBUTION STRATEGIES 6.1.1 Mexico Leveraging the existing network built by InterMed, Veda BioPharma has access to over 1,000 pharmacies across eight subrogated states in Mexico, servicing over 15 million patients.

6.1.2 Canada Pending Health Canada’s approval of Pasha’s distribution licenses, Veda BioPharma will be distributing CBD end-products throughout Canada via federal and provincial distribution channels.

6.1.3 United States Pasha Brands has partnered with Southern Glazier’s Wine & Spirits for the potential distribution of CBD products across the United States.

6.2 MARKETING STRATEGY The primary marketing objective for Veda BioPharma is to establish its brand as a global leader in cannabis innovation and production. The Company is in a unique position to provide clients a range of resources under the same brand name. Veda will capitalize on the opportunity by expending its efforts in securing a strong brand position to ensure a credible and sustainable position in both the cannabis and nutraceuticals markets. Moreover, the Company enters the marketplace with an already substantial distribution network, and will leverage existing partnerships and sales channels to effectively bring its three CBD product lines to market.

VEDA BIOPHARMA BUSINESS PLAN

6.3 TARGET MARKETS With its hemp-CBD product lines, Veda BioPharma caters to both medical patients and modern cannabis users. As regulations take shape in Mexico, and Canada gears up for the legalization of alternative consumption products (e.g. edibles, tinctures, etc.), Veda BioPharma has the opportunity to cater to a wide range of cannabis consumers:

MEXICO • • •

There is an estimated 1.4 million consumers in Mexico in 2019. 70 27% of the population, or 35.7 million Mexicans, have reported to suffer from chronic pain. 71 The senior population (65 years and older) is anticipated to grow 20.2% to 2050. 72

CANADA •

Cannabis Consumers: 5.3 million Canadians who reported to have used cannabis for recreational purposes in Q1 2019.73 Canadians with chronic pain, which was estimated to be about 6 million people or 19% of the population in 2018.74 Consumers of functional foods and natural health products, a combined market that generated $11 billion in Canada alone in 201175, and will be inevitably boosted with the growth of the CBD market.

• •

UNITED STATES •

In the United States, 33 states permit medical cannabis, treating 1.8 million patients for more than 60 different qualifying conditions.76

6.4 CANNABIS CONSUMER ARCHETYPES User Type Heavy

Moderate

Light

Archetype

Archetype Profile

Traditional Lifestylers

The classic consumer

Modern Lifestylers

The ‘Cannabis 2.0 consumer’

Functional Lifestylers

The extreme consumer

Medical Purists

The consumer for health & wellness

Weekend Enthusiasts

The moderate leisure consumer

Discreet Unwinders

The passionate, but secret consumer

Social Opportunists

The communal sharer

Silver Dabblers

The occasional indulger

Infrequent Conservatives

The graying traditionalist

Source: New Frontier Data, 2019. 70 “The Latin America Regional Cannabis Report: 2019 Industry Outlook” New Frontier Data, 2019. 71 “Chronic Pain: A Silent Epidemic.” Mexico Business Publishing, 2018. 72 “Aging in Mexico: Population Trends and Emerging Issues” The Gerontologist, 2017. 73 “National Cannabis Survey, first quarter 2019.” Statistics Canada, 2019. 74 “Prevalence of chronic pain among individuals with neurological conditions.” Statistics Canada, 2018. 75 “Industry Overview of the Functional Foods and Natural Health Products Sector.” Agriculture and Agri-Food Canada, 2012. 76 “State of the Cannabis Union 2019” New Frontier Data, 2019.

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6.5 BRAND STRATEGIES Veda BioPharma plans to create sustainable brands with the high-end, high-quality image at a fair cost. Appealing to the range of archetype profiles (see: 6.4 Cannabis Consumer Archetypes), a wide range of products and brands will be offered to various markets. Product lines will include specific markets such as cognitive brain enhancement supplements and pharmaceuticals, targeting women, children, pain management, adult health and pleasure to name a few.

6.5.1 Examples of Strategic Brand Direction Veda BioPharma will ensure all product packaging, web design and all other branded assets (digital and non-digital alike) follow a cohesive and consistent style. While the different product lines will have their own distinct branding, the Company will carefully identify the Veda brand as the best and most effective proponent of its various products. Cannabis brands and brand styles developed for the modern consumer are highlighted below:

VEDA BIOPHARMA BUSINESS PLAN

6.6 DIGITAL MARKETING STRATEGY 6.6.1 Web Strategy and Development Plan Veda BioPharma will design its corporate website, which will serve to host information about the Company, its products and operations. The purpose of the Web Development Plan is to ensure a central platform that reinforces the Company’s brand messaging is available to the target demographic and the public at large. Veda will implement a Web Development Plan that adheres to all regulations per the Cannabis Act (for Canadian audiences) and is in accordance with all requirements set by Health Canada. The web strategy will also adapt to the Canadian government’s ordinance as the laws pertaining to cannabis continue to evolve. The Web Development Plan will incorporate the following strategic targets: Responsive web design; Attractive, appealing and user-friendly design; Utilization of UX/UI best practices; A full set of ‘Calls to Action’ (CTA’s) to illicit consumer response and engage the target audience, as well as capture consumer data for future marketing strategies.

▪ ▪ ▪ ▪

Efficient online marketing strategies are a crucial component of Veda’s marketing strategy. The Company will utilize the following proven online marketing strategies:

CONVERSION RA TE OP TI MIZATION (CRO) Using videos on websites and landing pages increases conversion rates by 86%. 77 Veda BioPharma has the option of displaying video footage of their cultivation operations in Canada – driving the brand messaging that speaks to organic, Canadian operations, as well as to its team of cannabis experts or high-end finished products. Furthermore, 90% of users who search for a product or service online has not made their mind up about a brand prior to starting the search.78 The Company has the opportunity educate and communicate its brand messaging to effectively capture the consumers’ attention and build brand loyalty.

SEARCH ENGINE OPTIMI ZATION (SEO) Veda BioPharma will have a strong global market presence due largely to the fact that its operations are situated in key geographical locations around the world. Through the implementation of strategic SEO, users from Canada to Mexico will be able to discover the Veda website based on location. Utilizing keywords specific to the Company’s location is likely to be most effective in gaining the attention of local consumers and businesses. Local searches also lead 50% of mobile users to visit stores or facilities within 24 hours.79

77 Wordstream, 2018. 78 Status Labs, 2018. 79 Google, 2018.

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ORGANIC SEARCH Google is responsible for 94% of total organic web traffic 80 and 70-80% of search engine users are focused solely on organic results.81 Furthermore, 61% of marketers state that improving SEO and growing organic presence is the top inbound marketing priority.82 This affirms the priority of targeting consumers through effective key words that assist in communicating the Company’s brand messaging.

6.7 INDUSTRY ASSOCIATIONS 6.7.1 Canada CA NA DIA N H EMP TRA DE AL L IA NCE / H EMPTRA DE. CA The Canadian Hemp Trade Alliance (CHTA) is a national organization that promotes Canadian hemp and hemp products globally. Established in 2003, the Alliance represents those involved in Canada’s hemp industry. Members include farmers, processors, manufacturers, researchers, entrepreneurs and marketers. The key functions of the Alliance are to disseminate information, promote the use of nutritional and industrial hemp and coordinate research.

6.7.2 United States H EM P IN DUSTRIES A SSO C IA TION / TH EH IA . ORG The Hemp Industries Association (HIA) is a non-profit trade association representing more than onethousand (1,000) supporters, farmers and business members serving the hemp industries since 1994. The HIA stands for the fair and equal treatment of industrial hemp and it's opportunities in agriculture and in the marketplace. The Association is dedicated to education, industry development, and the accelerated expansion of hemp world market supply and demand but is focused on the rebirth of the hemp industries in the United States.

6.8 INDUSTRY EVENTS In an effort to further form strategic alliances in both the Canadian and Mexican cannabis arenas, Veda BioPharma will either participate in or attend various cannabis-related events, trade shows and conferences. These networking opportunities may be influential for the Company in terms of labor/added human capital, new and innovative cultivation technologies, unique cultivation methods and techniques, and more. M JBIZ CON INTERN A TION AL / Toronto, Canada September 04 – 06, 2019 IN TERN A TION AL CA NN A B IN OID-DERIVED PH A RMA CEUTICAL SUM M IT / Boston, USA September 10 – 12, 2019

80 Web Presence Solutions, 2017. 81 MarTech, 2018. 82 Hubspot, 2018.

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H EM P & CBD EXPO / Birmingham, UK September 13 – 15, 2019 H AL L OF FL OWERS / Santa Rosa, USA September 18 – 19, 2019 CA NN M ED 2019 / Pasadena, USA September 23 – 24, 2019 IM PERIA L C OUN TY H EM P SUM M IT & EXPO / Imperial, CA, USA September 27 – 28, 2019 M JBIZ DA IL Y L A TIN A M ERICA N C AN NA BIS SYM POSIUM / Bogotá, Colombia September 30 – October 01, 2019 CON FEREN C IA EM PRESA R IAL DE CA N NA BIS M IBC C / Mexico City, Mexico October 02, 2019 EXPO CAN NA BIS A RGEN T INA / Buenos Aires, Argentina October 04 – 06, 2019 IN -COSM ETIC S N ORTH A M ERIC A / New York, USA October 23 – 24, 2019 IN TERN A TION AL M EDICA L C AN NA BIS CONFEREN C E FOR H EAL TH PROFESS IONA L IN M EXICO / CDMX, Mexico October 31 – November 01, 2019 M EDICAL C AN NA BIS WORL D / St. George’s Bay, Malta November 04 – 05, 2019 CA NN A BIS C ON SUM ER & BUSIN ESS EXPO / Toronto, Canada November 22 – 25, 2019 SOUTH ERN US H EM P CON FEREN CE & EXPO / Myrtle Beach, USA December 02 – 04, 2019 M JBIZ CON / Las Vegas, USA December 11 – 13, 2019 SOUTH ERN US H EM P CON FEREN CE & EXPO / Myrtle Beach, USA December 02 – 04, 2019 CA NN AM EXIC O WORL D SUM M IT / San Cristóbal, Mexico April 23 – 24, 2020

VEDA BIOPHARMA BUSINESS PLAN

7 Financial Analysis 5-YEAR FINANCIAL PROJECTIONS

7.1 CAPITAL REQUIREMENT For the purposes of this Business Plan, Veda BioPharma seeks the following in capital funding: Phase 1: $3,000,000; Phase 2: $5,000,000; Phase 2: $30,000,000.

7.2 REVENUE ASSUMPTIONS To be added.

7.3 REVENUE SUMMARY To be added.

7.4 PROFITABILITY AND ROI To be added.

7.5 INCOME STATEMENT To be added.

7.6 BALANCE SHEET To be added.

7.7 CASH FLOWS To be added.

7.8 BENCHMARKS AND BREAKEVEN ANALYSIS To be added.

VEDA BIOPHARMA BUSINESS PLAN

7.9 RATIOS ANALYSIS To be added.

7.10 SENSITIVITY ANALYSIS To be added.

7.11 NET PRESENT VALUE To be added.

VEDA BIOPHARMA BUSINESS PLAN

8 Bibliography

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Canopy Growth. “Press Release: Canopy Growth and Mettrum Announce Closing of Acquisition” Jan. 31, 2017. Canopy Growth. Retrieved from: https://www.newswire.ca/news-releases/canopygrowth-and-mettrum-announce-closing-of-acquisition-612336083.html Canopy Growth. “Press Release: Canopy Growth Extends its Industry Leading Hemp Position” Nov. 27, 2017. Canopy Growth. Retrieved from: https://www.newswire.ca/news-releases/canopygrowth-extends-its-industry-leading-hemp-position-660238553.html Canopy Growth. “Press Release: Canopy Growth completes ebbu asset acquisition” Nov. 26, 2018. Canopy Growth. Retrieved from: https://www.newswire.ca/news-releases/canopy-growthcompletes-ebbu-asset-acquisition-701234201.html Carpenter, D. 20 Dec. 2018. “Legal Hemp In 2019 May Be A Boon For Stressed Out American Farmers.” Forbes. Retrieved from: https://www.forbes.com/sites/davidcarpenter/2018/12/20/legal-hemp-in-2019-may-be-aboon-for-stressed-out-american-farmers/#2466887f8f3b Cowee, M. “Farmers and ranchers show interest in growing and using hemp” Mar. 04, 2019. Hemp Industry Daily. Retrieved from: https://hempindustrydaily.com/chart-farmers-and-ranchersshow-interest-in-growing-and-using-hemp/ Cragg, J.J., Warner, F.M., Shupler, M.S., Jutzeler, C.R., Cashman, N., Whitehurst, D.G.T., & Kramer, J.K. “Prevalence of chronic pain among individuals with neurological conditions.” Mar. 21, 2018. Health Reports: Statistics Canada. Retrieved from: https://www150.statcan.gc.ca/n1/pub/82003-x/2018003/article/54921-eng.htm Crippa, J.A., Derenusson, G.N., Ferrari, T.B., Wichert-Ana, L., Duran F.L., Martin-Santos, R., Simoes, M.V., Bhattacheryya, S., Fusar-Poli, P., Atakan, Z., Santos Filho, A., Freitas-Ferrari, M.C., McGuire, P.K., Zuardi, A.W., Busatto, G.F., & Hallak, J.E. “Neural basis of anxiolytics effects of cannabidiol (CBD) in generalized social anxiety disorder: a preliminary report.” 25 Jan. 2011. Journal of Psychopharmacology. Retrieved from: http://journals.sagepub.com/doi/abs/10.1177/0269881110379283?url_ver=Z39.882003&rfr_id=ori:rid:crossref.org&rfr_dat=cr_pub%3dpubmed Devinsky, O., Cross, J.H., Laux, L., Marsh, E., Miller, I., Nabbout, R., Scheffer, I.E., Thiele, E.A., & Wright, S. “Trial of Cannabidiol for Drug-Resistant Seizures in the Dravet Syndrome.” 25 Mar. 2017. The New England Journal of Medicine. doi: 10.1056/NEJMoa1611618. Retrieved from: https://www.nejm.org/doi/full/10.1056/NEJMoa1611618#t=article Dorbian, I. “CBD Market Could Pull In $16 Billion By 2025, Says Study” Mar. 12, 2019. Forbes. Retrieved from: https://www.forbes.com/sites/irisdorbian/2019/03/12/cbd-market-could-pullin-16-bln-by-2025-says-study/#1c34ab533efd Flores, A. “Chronic Pain: A Silent Epidemic.” Oct. 17, 2018. Mexico Business Publishing. Retrieved from: http://mexicosalud.com/chronic-pain-a-silent-epidemic/

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Giammona, C. & Einhorn, B. “Booming Demand for CBD Is Making Hemp the Cannabis Cash Crop.” Jul. 17, 2019. Bloomberg. Retrieved from: https://www.bloomberg.com/news/articles/201907-18/booming-demand-for-cbd-is-making-hemp-the-cannabis-cash-crop Green, M. “Mexico Hands Out Firt Permits to Supply Cannabis Products.” Nov. 25, 2018. Grizzle. Retrieved from: https://grizzle.com/mexico-supply-cannabis-products/ IMF. “World Economic Outlook Database, April 2019.” May 14, 2019. International Monetary Fund. Retrieved from: https://www.imf.org/external/pubs/ft/weo/2019/01/weodata/weorept.aspx?pr.x=58&pr.y=19& sy=2017&ey=2021&scsm=1&ssd=1&sort=country&ds=.&br=1&c=273&s=NGDPD%2CPPPGD P%2CNGDPDPC%2CPPPPC%2CPCPIPCH&grp=0&a= Index Market Research. “Global CBD Skin Care Products Market 2019 – Kiehl’s, Josie Maran Cosmetics, Cannuka, Lord Jones, The CBD Skincare, CBD For Life, Populum.” May 14, 2019. The Market Research News. Retrieved from: https://themarketresearchnews.com/2019/05/14/%EF%BB%BFglobal-cbd-skin-careproducts-market-2019-kiehl%C2%92s-josie-maran-cosmetics-cannuka-lord-jones-the-cbdskincare-cbd-for-life-populum/ Kaplan, J. “Edible weed may be half of the $5.4 billion pot business” Bloomberg. 04 Feb, 2016. Retrieved from: https://www.bloomberg.com/news/articles/2016-02-04/edible-weed-may-behalf-of-the-5-4-billion-pot-business Kelley, R. “5 Things That Are Chemically Similar to a Cannabis High.” Apr. 27, 2016. Leafly. Retrieved from: https://www.leafly.ca/news/science-tech/things-chemically-similar-to-a-cannabis-high Khiron Life Sciences Corp. “Press Release: Khiron Strategically Positioned to Enter Mexican Medical Cannabis Market.” May 29, 2019. Khiron Life Sciences Corp. Retrieved from: https://www.newswire.ca/news-releases/khiron-strategically-positioned-to-enter-mexicanmedical-cannabis-market-683926781.html Kovacevich, N. “With CBD, Cannabis Wellness Market Goes Big.” Mar. 06, 2019. Forbes. Retrieved from: https://www.forbes.com/sites/nickkovacevich/2019/03/06/with-cbd-cannabis-wellnessmarket-goes-big/#2301b7093fcb Kuhl, L. “These three marijuana stocks are set to dominate the coming Mexican cannabis market.” Jan. 29, 2019. Pot Network. Retrieved from: https://www.potnetwork.com/news/these-threemarijuana-stocks-are-set-dominate-coming-mexican-cannabis-market Levesque, E. “U.S. CBD Market Anticipated to Reach $20 Billion in Sales by 2024.” May 09, 2019. BDS Analytics. Retrieved from: https://bdsanalytics.com/u-s-cbd-market-anticipated-to-reach-20billion-in-sales-by-2024/ Maybin, S. “Uruguay: The world’s marijuana pioneer.” Apr. 04, 2019. BBC News. Retrieved from: https://www.bbc.com/news/business-47785648

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Moss, A. “Jefferies CBD beauty market report predicts huge growth.” Jun. 06, 2019. Keeping Stock. Retrieved from: https://keepingstock.net/jefferies-cbd-beauty-market-report-predicts-hugegrowth-de73dbf39fbe Pascual, A. “Mexico approves nation’s first 38 over-the-counter cannabis products.” Nov. 29, 2018. MJBizDaily. Retrieved from: https://mjbizdaily.com/mexico-approves-nations-first-38-overthe-counter-cannabis-products/ Pascual, A. “Mexico seeks public input as marijuana legalization draws closer.” Aug. 06, 2019. MJBizDaily. Retrieved from: https://mjbizdaily.com/mexico-seeks-public-input-as-marijuanalegalization-draws-closer/ Pellechia, T. 01 Mar. 2018. “Legal Cannabis Industry Poised for Big Growth, In North America and Around the World.” Forbes. Retrieved from: https://www.forbes.com/sites/thomaspellechia/2018/03/01/double-digit-billions-puts-northamerica-in-the-worldwide-cannabis-market-lead/#744413636510 Phivida. “Press Release: Phivida Signs Distribution Agreement in Japan” Jan. 05, 2018. Phivida. Retrieved from: https://www.newswire.ca/news-releases/phivida-signs-distributionagreement-in-japan-668125413.html Press Release. “CBD Skin Care Market 2019 Global Analysis, Opportunities and Forecast to 2024.” Apr. 04, 2019. Market Watch. Retrieved from: https://www.marketwatch.com/pressrelease/cbd-skin-care-market-2019-global-analysis-opportunities-and-forecast-to-20242019-04-04 Press Release. “CBD Skin Care Products Market Opportunity Assessment 2019-2028.” May 22, 2019. Market Watch. Retrieved from: https://www.marketwatch.com/press-release/cbd-skin-careproducts-market-opportunity-assessment-2019-2028-2019-05-22 Press Release. “MYM Incorporates 'MYM Nutraceuticals Mexico S.A. de C.V.' to Focus on Import and Distribution of CBD-Rich Hemp Products in Mexico.” Apr. 16, 2019. MYM Nutraceuticals Inc. Retrieved from: https://www.newswire.ca/news-releases/mym-incorporates-mymnutraceuticals-mexico-s-a-de-c-v-to-focus-on-import-and-distribution-of-cbd-rich-hempproducts-in-mexico-806942600.html Press Release. “RISE'S Hemp-Based CBD Product Now Approved for Distribution in Mexico” Apr. 17, 2019. Newsfile Corp. Retrieved from: https://www.newsfilecorp.com/release/44145/RISESHempBased-CBD-Product-Now-Approved-for-Distribution-in-Mexico Price, E. “51% Of Seniors That Have Tried CBD Report An Improved Quality Of Life.” Feb. 24, 2019. Forbes. Retrieved from: https://www.forbes.com/sites/emilyprice/2019/02/24/51-of-seniorsthat-have-tried-cbd-report-an-improved-quality-of-life/#26186c646b7f

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Ross, S. “All eyes on Canada as first G7 nation prepares to make marijuana legal.” Jun. 06, 2018. The Guardian. Retrieved from: https://www.theguardian.com/world/2018/jun/06/all-eyes-oncanada-as-first-g7-nation-prepares-to-make-marijuana-legal Sharp, A. & Kelman, B. “Trump signs Farm Bill and legalizes hemp, cannabidiol” Dec. 21, 2018. USA Today. Retrieved from: https://www.usatoday.com/story/news/2018/12/21/hemp-cbd-farmbill-signing-trump-delaware-agriculture/2387656002/ Speights, K. “2 Under-the-Radar Stories That Could Be Huge News for Marijuana Stocks.” Nov. 07, 2018. The Motley Fool. Retrieved from: https://www.fool.com/investing/2018/11/07/2-underthe-radar-stories-that-could-be-huge-news.aspx The Canadian Press. “Retailers struggle to keep CBD on shelves in Canada.” May 06, 2019. CBC. Retrieved from: https://www.cbc.ca/news/canada/british-columbia/cbd-shortage-canadaretailers-struggle-1.5124222 “The Global State of Hemp: 2019 Industry Outlook” 2019. Hemp Business Journal/New Frontier Data. The GrowthOp. “U.S. retailer sees CBD products as the next big thing in beauty.” Jan. 15, 2019. The Growth Op. Retrieved from: https://www.thegrowthop.com/cannabis-health/u-s-retailersees-cbd-products-as-the-next-big-thing-in-beauty “The Latin America Regional Cannabis Report: 2019 Industry Outlook” 2019. Hemp Business Journal/New Frontier Data. WEDC. “Strong growth in Mexico’s market for cosmetics, beauty, personal care products.” June 2018. Wisconsin Economic Development Corporation. Retrieved from: https://wedc.org/export/market-intelligence/posts/strong-growth-in-mexicos-market-forcosmetics-beauty-personal-care-products/

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