Ann: CEO Roadshow Presentation, page-44

Hi JohnP

Yes I've read that article and others like it. We would be silly to stick our heads in the sand and think prices will remain high for ever. I'm sure RGI have done their numbers on a significantly lower price per gram than the present. While it is entirely possible we could be producing 9m grams annualised by the end of next year & selling it for A$6 a gram, I think it unlikely we'll get that price end of next year. I've looked at a worst case scenario below.

Having said that, the wholesale price when I posted that link was C$5.93 as per my post, it is now $5.61 not much lower since July. Retail prices are higher again. Google "Cannabis supply Canada" For every article talking about oversupply there are 2-3 talking about undersupply many from credible sources. Having read many of these, it is hard to know which way pricing will go . Even if prices dropped to $3 we'd still be making about $2 profit a gram. Our present share price is based on no production at all.

If prices come down, the illegal market will also diminish and increase demand in the legal sector. This market surpasses the legal market at the moment. Also we have the export market, prices in Europe are very high, probably why we see mention of possible JVs in Europe in our updates.

This supposed stock build up seems to contradict the reality of current pricing. Most producers seem to process their crops into oils, wax etc yet that article shows these processed products as being only about 8% assuming "finished inventory" is a processed product.

And what would happen if say prices crashed to say $1.50 - highly unlikely, but worth considering.

Firstly the number of new applicants to HC would tumble, Many producers small & big would go out of business only the most efficient would survive. Our Cannifarms profit would dive, but it would still be in profit. Our machine sales - they would skyrocket! After all our machines have the highest yields per sq ft, use the least water & power, etc etc, being fully automated the cultivating labour is minimal - yes still need harvesters etc. Of course we'd still have fresh foods. I think overall we'd be better off - an advantage of being diversified.