Delta 9 Cannabis Inc. Investor Presentation - Q3 2021 TSX:DN TSX:DN.DB TSX:DN.WT.A OTCQX:DLTNF - Capital Event Management Ltd.
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Delta 9 Cannabis Inc.
https://invest.delta9.ca/
Investor Presentation
Q3 2021
TSX:DN
TSX:DN.DB
TSX:DN.WT.A
OTCQX:DLTNF
Page 1
Disclaimer
Disclaimers
This document contains forward-looking statements regarding Delta 9 Cannabis Inc. ("Delta 9" or "Company"). Forward-looking statements are
statements that relate to future events or future financial performance. In some cases, you can identify forward-looking statements by the use of
terminology such as "may", "should", "intend", "expect", "plan", "anticipate", "believe", "estimate", "project", "predict", "potential", or "continue" or the
negative of these terms or other comparable terminology. These statements speak only as of the date of this document.
This document also contains financial outlooks ("Outlooks") within the meaning of applicable securities laws. The Outlooks have been prepared by our
management to provide an outlook of our activities and results and may not be appropriate for other purposes. The Outlooks have been prepared
based on several assumptions. The actual results of operations of Delta 9 and the resulting financial results may vary from the amounts set forth
herein, and such variation may be material. Management believes that the Outlooks have been prepared on a reasonable basis, reflecting
management's best estimates and judgments. Any Outlooks in this document are made as of the date of this document and are based upon the
information available to us as of that date.
Examples of forward-looking statements that may have been made in this document include statements pertaining to, among other things: (1)
financial projections; (2) new supply agreements; (3) growth in cannabis production and production facilities; and (4) retail store growth.
Material assumptions supporting these forward-looking statements include, among other things: assumptions regarding the recreational use
cannabis market; that retail expansion will result in greater branding and marketing opportunities and increased sales prices, but also increased
overhead and sales costs; that increasing the scale of Delta 9’s operations will reduce its per gram production costs; assumptions regarding the
amount of cannabis that can be produced per “grow pod”, the expected selling price of such cannabis and Delta 9’s timeline for the construction of
grow pods; that Delta 9 will be able to obtain any necessary financing on acceptable terms; and assumptions regarding our management team's
ability to implement our business plan, and general economic and financial market conditions.
Forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, including all of the risks set
forth in the continuous disclosure documents of Delta 9, including its annual information form dated March 31, 2021. These risks, as well as risks that we
cannot currently anticipate, could cause our actual results, levels of activity or performance to be materially different from any future results, levels of
activity or performance expressed or implied by the forward-looking statements in this document.
Page 2
Delta 9 Cannabis Inc.
• Vertically Integrated cannabis company based in Winnipeg, Manitoba
• Over 7 years of operational experience as one of Canada’s oldest cannabis companies
• 3 Diversified revenue segments with Wholesale, Retail, and Business to Business
• Health Canada Licensed for cultivation, processing, medical sales and wholesale distribution
• Licensed retailer with 16 operational stores, and several stores in development
• Business to business offering includes production equipment, consulting, and genetics sales
• Shares listed on main board TSX under symbol DN and OTC under symbol DLTNF
Page 3
Delta 9 at a Glance
One of Canada’s First LPs Low-Cost Proprietary Cultivation
Industry leading cost per gram of $0.58/g
Proven track record for high quality cannabis and compliance
Favorable labor, land leasing, and power costs ($0.04/kWh)
Proprietary Grow Pods
Positive Cash Flow, Positive EBITDA Modular climate controlled hydroponic system provides unique
$1.5 Million Cash Flow From Operations in 2020 growing environments and mitigates contamination
$3.8 Million Adjusted EBITDA 2020
Superior cultivation economics with focus on strong ROIC
Retail Market Leader
29% market share1 in Manitoba Award-Winning Quality
11 operational retail stores in Manitoba 12 Strains in current portfolio with 17%+ THC
Plus four in Alberta & one in Saskatchewan
Extensive Strain Library Scalable Cultivation
World-class bank of genetics with over 100 strains available for
State of the art facilities with ~8,325 kg/year current capacity
commercialization; currently a total of 25 commercial strains with
12 core strains, 4 cannabis pre-roll products and 2 oil blends
Well-positioned for Cannabis 2.0
Strong Management Team Agreements with top LPs & companies in key consumer verticals
Management with Company since inception Diversified footprint in Ontario, Newfoundland, B.C, Alberta,
Saskatchewan, and Manitoba
1. Calculated as Delta 9 retail sales ($10.37 MM)/Manitoba sales ($35.59MM) in Q2 2021
Page 4
Board of Directors & Management
Strong operators and master grow team with stable structure and no key personnel
turnover. Deep in-house personnel and process expertise is a key differentiator
• Over 30 years of entrepreneurship experience across technology, automated systems, security, and process control
Bill Arbuthnot protocols sectors
Co-Founder, Director • Worked in network development and engineering for one of Canada’s Big Six Banks
• Supervises R&D, design, construction of Delta 9’s Grow Pods and facilities.
• Founded Delta 9 with Bill as a fourth-year student at the Asper School of Business at the University of Manitoba
• Driven Delta 9’s growth from original 2 founders to over 300 employees
John Arbuthnot
• Raised over $80MM in expansion capital since 2017, and is the youngest CEO of a TSX-listed company
Co-Founder, CEO, Director
• Focused on corporate strategy, financial planning, business development, and implementation of Delta 9’s modular
growth strategy
• Former managing Director in the Deals practice at PwC
• More than 25 years experience in financial investing, life sciences, consumer healthcare, healthcare services and
Nitin Kaushal
medical device industries
Director, Independent
• Sat on the board of numerous pharmaceutical and healthcare companies, and held senior roles in investment banking,
Chairman
venture capital and consulting firms
• Ranked as the top Healthcare Investment Banker in 2008/2009 by Brendan Wood International
• President of Triple D Developments, where she managed 1.5 MM sq. ft. of commercial and industrial buildings,
Joanne Duhoux-Defehr
including the Delta 9 site
Director
• Experience in business litigation and intellectual property in the U.S. as a member of the California bar
• Chairman of Balnagowan Investments and career investment banker
Hugh Aird • Served as Chairman of Trilon Financial, Founder of Trilon Securities Corporation, and Vice Chairman of Merrill Lynch
Director Canada and Edelman Canada
• Completed many significant merger and acquisitions, as well as over 100 public financings throughout North America
Page 5
Experienced Management
• 25+ years experience in public accounting in areas of First Nations audit, financial training and consulting, financial statement
Jim Lawson
preparation, income tax, and consulting
CFO
• Served as a board member for numerous for profit and non-for-profit boards serving in audit committee roles
• Involved with Delta 9 since its founding in 2013.
Marshall Posner
• Holds 25+ years experience in Marketing and brand development, creative content design, creating high performance websites, and
CMO
developing contextual advertising campaigns
David Kideckel
• Former Managing Director, Institutional Equity Research at ATB Financial
EVP, Head of Strategy, Business
• 10+ years experience in Health Care, Life Sciences, and Capital Markets
Development and Capital Markets
Jennifer Serek • Holds 20+ years in HR experience
VP of Human Resources • Prior to joining Delta 9 she worked in the senior HR role at one of Western Canada’s largest furniture manufacturers.
• Bachelor of Commerce with Honors from the University of Manitoba majoring in both accounting and finance
Mark Jonker
• 20+ years of manufacturing experience in the furniture and vertical machinery industries. Dedicated to implementing sustainable lean
COO
principles to drive employee engagement with results in both higher quality and decreased overall costs
• Holds 30+ years of experience in investor & media relations, finance and accounting (CPA & MBA)
Ian Chadsey
• Prior experience as VP of Investor & Media Relations Bell MTS, Nutrient (former Agrium)
VP of Corporate Affairs
• Began career as equity analyst on Bay Street
Al Roney • Holds 30+ years in retail experience in private sector and crown liquor sales
VP of Retail Store Development • Prior experience as Executive General Manager Retail Stores for Manitoba Liquor and Lotteries
Derek Reimer • 20+ years of experience in asset protection, safety, & critical regulatory compliance.
VP of Compliance and loss • Prior experience leading divisional big box multi-channel business operations and compliance which have undergone substantial
prevention organizational growth and scale at Home Depot and more recently Cabela’s Canada
Page 6
Delta 9 Grow Pods
• Cultivation based in high tech proprietary grow areas called Grow
Pods:
– Constructed on-site using retro-fitted shipping containers Modular
installed with customized wall panels, electrical, lighting, HVAC,
and security
• Grow method ensures consistently high yields and quality
• Data is collated and analyzed to refine harvest techniques
• Mitigates crop loss and risk of contamination
Scalable
• World-class bank of strains and genetics
• Large library of strains and genetics ‘in reserve’ to be put in
production and commercialization
• Combined total of 30 commercial dried strains with 12 core strains,
with 4 commercial pre-roll products and 2 oil blends already
developed Stackable
• Proprietary in-house production platform complimented by Ample
Organics compliance and batch tracking system
Page 7
Precise & Low-Cost Cultivation With a low conversion and installation cost, Delta 9 can expand for less than $100/square foot making incremental expansion very economical. Investment in automation of key processes has resulted in cash production costs as low as $0.58./gram, placing the Grow Pods in an industry leading category for production efficiency. High level of control over the growing environment allows us to produce indoor hydroponic “craft” quality cannabis products. Production in small modular areas helps prevent the risk of contamination and disease and compartmentalizes risk of crop loss. Economical & Efficient Hydroponic Craft Quality Risk Reduction Page 8
Cultivation Capacity
Area (Sq. ft.) Total Grow Pods Output (kg/year) CAPEX
Currently Licensed 95,040 297 8,325 $25.0MM
Production Output (grams)
3000000
2500000
2000000
1500000
1000000
500000
0
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Page 9
Delta 9 Facility
Low-cost and highly advanced facility
• Cultivating premium quality cannabis at $0.58/g
• Favorable labor, land leasing, and power costs ($0.04/kWh)
Modular and scalable production with significant expansion potential
• Currently operating 297 grow pods offering 95,040 square feet of production
• Projected annual production of 8,325 kg of dried cannabis
• 7 acres (Phase I) owned of 47 total Acres
• Option to purchase remaining 40 acres
for $6MM exercised
‒ $4.5MM mortgage secured
• 1 building owned (Phase I)
Phase I
Phase II
Potential Future
Expansion
Buildings
95,040 sq. ft. Current Proprietary Hydroponic Prevents Contamination
Unique Grow Environments 297 Grow Pods
Production Grow System Risk
Page 10Product Offerings
Oils, Extracts &
Derivative Product Proportion of Revenue by Category
• Ingestible oils
• Vape cartridges 15%
• Dried sift/kief
• Additional SKUs in
development for 2021
15%
Pre-Rolls
• 2x0.5g setting Premium Dried Flower
• 4 SKUs • 3.5g, 7.0g, 28g settings
• Over 25 current SKUs
70%
Premium Dried Flower Pre-Rolls Oils & Extracts
Page 11Premium Dried Flower Portfolio
As one of the oldest Licensed Producers, Delta 9 has a comprehensive seed bank with over 100 unique
genetics. Our goal is to produce the highest quality indoor hydroponic cannabis on the market.
Strain THC (%) CBD (%)
Cypress Craft K-Mintz 22-28% 0.05% Premium high
Growers Private Stash 22– 28% 0.05% potency
flower ensures
Sinaloa Gold 21-25% 0.05%
protection
Electric Punch 18-22% 0.05% from price
Headbanger 18-22% 0.05% compression
Apple Fritter 19-23% 0.05%
White Out 18-22% 0.05%
Space Cake 15-19% 0.05%
Kali Mist 15-19% 0.05%
Jack Herer 12-16% 0.05%
Lava Cake 14-18% 0.05%
Lemon Meringue 11-15% 0.05%
CBD Skunk Haze 4-6% 6-8%
Page 12Delta 9 Pre-Rolls
Delta 9 offers 4 different cannabis pre-roll products in different potency categories; Delta 9 Twist, being
our high THC, Bliss being mid-range THC, J-Lo, low potency and Mellow are a balanced pre-roll inclusive of
both THC and CBD. Our pre-rolls offer consumers custom curated blends of premium cannabis flower in
2x0.5g pre-rolled “Raw” cones.
To date we have produced and sold over 1 million cannabis pre-rolls.
Page 13Delta 9 Oils, Vapes, & Concentrates
Delta 9 is well positioned for Cannabis 2.0
5:10 Vape Cartridges (Branded 5:10 Batteries)
• Cannabis Distillate and Blended Terpenes in various concentrations
Ingestible Cannabis MCT Oils • Blast (1:0 THC/ CBD)
• Odyessy Oil (20 mg/ml THC) • Harmony (1:1 THC/ CBD)
• Oasis Oil (10 mg/ ml THC) • Cruise (2:1 THC/ CBD)
• CBD and 1:1 Formulations in development
Concentrates
• Onyx - Pressed Hash (30 – 35% THC)
• Sapphire – Kief (30 – 35% THC)
Future Product Lines
• Edibles (Soft Chews)
• Additional CBD and 1:1 MCT Oils
• Drinkables
Page 14Wholesale Cannabis Distribution
Manitoba Ontario
July 2018 June 2020
Supply Listing Supply listing
Saskatchewan
Feb 2019 Newfoundland
Supply Listing June 2020
Supply Listing
B.C
October 2019
Supply Listing
Alberta Quebec
May 2019 In the process
Supply Listing of listing
Page 15Retail Stores – An Emerging Chain
Delta 9 currently operates 16 retail stores with plans to build out an
additional 4 locations near term
OSBORNE
ST. VITAL BRANDON THOMPSON
VILLAGE
$32 million in Retail Revenue in 2020
Page 16Retail Strategy and Benefits
Brand Awareness and Location Strategy Data and Brand Trends and Analytics
Distribution • High-Profile and High- Partnerships • Live feedback from
• Creates awareness Traffic Locations • Delta 9 has brand customers on
for Delta 9 brand • Locate near good partnerships with product, pricing,
• Retailers control location partners like the industry’s and industry trends
purchasing decisions liquor, grocery, leading suppliers has made Delta 9 a
• 25% of Products sold pharmacy, and fast- (Canopy, Tilray, leader in both
in store are Delta 9 food Sundial, Cronos, wholesale and retail
brands • Be a convenience not Hexo/ Truss, and
a destination retailer more)
Page 17Expanding Retail Store Chain
Manitoba
11 x Stores in
Winnipeg
1 x Store in
Saskatchewan Brandon
1 x Store in
1 x Store in
Lloydminster, SK
Selkirk
1 x Store in
Alberta Thompson
1 x Store in
Grand Prairie
1 x Store in
Calgary
2 x Stores in
Edmonton
16 Operating Stores as of September 2021
Page 18Business to Business
GROW PODS LICENSING & GENETICS 2020 B2B
Sells turnkey CONSULTING Packages genetics Material revenue
cultivation systems Provides licensing offering for other segment with
and equipment and consulting licensed producers deliveries of 300 Grow
across Canada services to new and looking to expand Pods and over $17
pre-licensed their cannabis Million in Revenue
producers genetics since 2019
Page 19Revenue Growth
Revenue Growth
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
2017 2018 2019 2020
• 4 Year Revenue Growth of 5,413%, placed 7th out of 448 companies
• 2021 - Delta 9 awarded 7th Fastest Growing Canadian Company in Globe and Mail annual ranking of fastest
growing Canadian Companies
Page 20Key Performance Indicators
Production/Wholesale Unit Q3, 2020 Q4, 2020 Q1, 2021 Q2, 2021 Q3, 2021
Total Grams Produced 1,908,875 2,128,288 2,178,181 2,211,844 2,424,387
Cash Production Cost Per Gram $0.74 $0.67 $0.60 $0.65 $0.58
Total Cash Cost Per Gram $0.86 $0.80 $0.75 $0.80 $0.73
Total Grams Sold 961,052 1,245,317 1,076,755 1,732,557 1,208,866
Avg Selling Price per Gram $3.08 $3.57 $3.16 $3.23 $3.42
Retail Unit
Number of Transactions Processed 184,750 202,347 210,138 227,051 243,616
Avg Transaction Size $49.62 $50.13 $47.79 $46.89 $42.85
Page 21Historical Financial Highlights
(All numbers in 000’s) Q2 2021 Q3 2020
Q3 2020 Q4 2020 Q1 2021
Wholesale Revenue $2,965 $4,444 $4,317 $5,594 $4,129
Retail Revenue $7,906, $10,200 $9,305 $10,037 $10,093
B2B Revenue $1,898 $634 $186 $1,814 $1,082
Revenue (Net of Excise Tax) $13,130 $14,150 $13,228 $16,751 $15,192
Cost of Sales $(10,058) $(7,879) $(9,540) $(11,817) $(10,425)
Gross Profit Before $3,072 $6,270 $3,688 $4,933 $4,767
Changes in Biological Assets
Unrealized gain from changes in fair
value of biological assets ($2,648) ($873) ($736) $(42) $1,690
Gross Profit $423 $5,397 $2,952 $4,890 $6,458
Total Operating Expenses $(5,002) $(5,467) $(6,196) $(5,694) $(6,513)
Income from Operations $(4,578) $(69) $(3,244) $(803) $(55)
Adjusted EBITDA $210 $2,553 $6 $1,199 $191
8 Consecutive Quarters of Positive Adjusted EBITDA
Page
Page22
21Financial Position
(All numbers in 000’s)
Q3 2021
Current Assets $31,919
Capital Assets $29,921
Other Assets $16,727
Total Assets $78,567
Total Liabilities $48,499
Total Shareholder Equity $29,660
Page
Page23
22Capitalization Table
Type of Security Outstanding (MM)
COMMON SHARES 105.52
CONVERTIBLE DEBENTURES 11.80
WARRANTS
Exercisable @ $1.33 until July 17, 2022 9.75
Exercisable @ $0.70 until December 21, 2023 5.23
AGENT'S WARRANTS
Exercisable @ $1.21 until July 17, 2022 0.68
Exercisable @ $0.55 until December 21, 2023 0.73
STOCK OPTIONS
Exercisable @ $0.55 until November 13, 2024 2.57
Exercisable @ $0.60 until November 27, 2025 1.05
Restricted Share Units 0.65
Restricted Share Units 1.85
FULLY DILUTED 138.68
*Further details available on Sedar
Page 24Contact Us
Management is prepared to meet with interested Investors
Please coordinate with Investor Relations below:
Ian Chadsey
Vice President of Corporate Affairs
Delta 9 Cannabis Inc.
+1 (204) 898-7722
Ian.Chadsey@delta9.ca
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