management presentation march...
TRANSCRIPT
M A N A G E M E N T P R E S E N T A T I O NMARCH 2019
DISCLAIMER
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Today’s agenda
Our Company
Industry Macro Trends
Our Brands
Q318 Financials
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02
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$80 Billion1
BY 2030
$24 Billion2
PROFIT
$196B
$114B$102B
$80B$75B $71B
$57B$51B
$30B
Froze
n
Alco
ho
l
Ge
ne
ral F
oo
d
Ca
nn
ab
is
Ho
me
Ca
re
He
alth
Re
fridg
era
ted
Be
vera
ge
s
Be
au
ty
Bill
ion
U.S
. D
olla
rs
Cannabis will become a top
consumer category by 20303
1 . COWEN CANNABIS ESTIMATE JANUARY 2019
2. INTERNAL ESTIMATE
3. STATISTA 2017 RETAIL $ VOLUME AND COWEN CANNABIS ESTIMATE JANUARY 20194
T H E O P P O R T U N I T Y
U.S. CANNABIS MARKET IS BECOMING EVEN MORE ATTRACTIVE
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REGULATION ACCESS EXPECTATIONS
KEY MACRO TRENDS
Increased regulation
Increased complexity
Ubiquitous retail
9 new states in 2019
Evolving consumer needs
Greater industry expectations
BD I STATES TO WATCH I N 2019
Our mission is to normalize and
professionalize cannabis
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Highly Effective Execution
Scale SellingSystem
House of Brands
Rapid Innovation Capabilities
T H E C R E S C O L A B S A D V A N T A G E
CAPABILITIES TO DRIVE LONG-TERM VALUE
W H A T W E D O H O W W E D O IT
Top-TierManagement Team
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U NM AT C H E D SU C C E S S I N
C O M P E T I T I V E ST AT E S
1. We win competitive
licenses to open
new markets
2. We acquire
to enter
existing markets
3. We get to
market
faster
4. We establish
dominant
positions
AC Q U I R E ASSE T S T O D R I V E
GR O W T H AND F O O T P R I NT
O P E R AT I O N A L F AST E R
T H AN C O M P E T I T O R S
AC H I E V E 1 0 0 % P E NE T R AT I O N
AND D O M I NA NT M AR K E T
SH AR E
HIGHLY EFFECTIVE EXECUTION
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1. MANAGEMENT ESTIMATES AND SUBJECT TO CLOSING PENDING TRANSACTIONS IN NY, MA & MD
2. MARKET CAP AS OF FEBRUARY 28, 2019
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ONE OF THE LARGEST OPERATORS IN THE U.S.
Summary Company Information1
Charles BachtellCEO & COFOUNDER
Joe Caltabiano P RESIDENT & COFOUNDER
Ken Amann CFO
David EllisCOO
Zach Marburger CIO
Jason Erkes CCO
John SchetzGENERAL COUNSEL
Jennifer Clark EVP OP ERATIONS
Emily FitzgeraldDIRECTOR HUMAN RESOURCES
DECADES OF EXPERIENCE WITHIN OUR MANAGEMENT TEAM
Scott WilsonCXO
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DIVERSITY OF TOP-TIER EXPERIENCES ACROSS THE TEAM
+120 MillionRESIDENTS
+866 MillionTOURISTS
CURRENT OPERATIONS/LICENSED IN IL, PA, OH, NV, CA, AZ AND NY, MD, AND MA ARE SUBJECT SOLELY TO REGULATORY APPROVAL
PENDING LICENSE APPLICATION MI
MINDY’S EDIBLES LICENSING OPPORTUNITY IN OR, WA, CO, OK, NM
TARGETING EXPANSION IN FL, NJ VA, CT
WE ARE BUILDING SCALE ACROSS THE U.S.
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CURRENT PRODUCTION CAPACITY
CULTVATION SQUARE FEET DRY FLOWER ANNUAL CAPACITY (LBS)
TOTAL #
FACILITIES
TOTAL FACILITY
SQUARE FOOTAGECURRENT EXPANSION
TOTAL BY
2019 YECURRENT(5) EXPANSION(5)
TOTAL BY
2019 YE(5)
I L L I N O I S (3) 3 238,000(3) 39,000 100,000 139,000 14,190 53,170 67,360
P E N N S Y L V A N I A (3) 1 118,000(3) 20,000 85,000 105,000 8,250 43,312 51,563
O H I O (2) 1 77,000(3) 25,000 25,000 50,000 9,376 9,543 18,919
C A L I F O R N I A (2) 3 650,000 132,000 460,000 592,000 42,408 140,284 182,692
N E V A D A 1 60,000 N / A 36,000 36,000 N / A 13,578 13,578
A R I Z O N A (1) 2 150,000 128,000 0 128,000 34,265 0 34,265
N E W Y O R K (1) 1 180,000(3) N / A 100,000 100,000 N / A 44,123 44,123
M A S S A C H U S E T T S (1) 1 150,000 13,000 77,000 90,000 5,071 29,968 35,039
T O T A L ( 4 ) 13 1,623,000 357,000 883,000 1,240,000 113,560 333,978 447,539
1. SUBJECT TO CLOSING PENDING TRANSACTIONS.
2. LOCAL APPROVAL RECEIVED, STATE APPROVAL PENDING.
3. SUBJECT TO EXPANSION / CONSTRUCTION.
4. EXCLUDES MARYLAND PROCESSING FACILITY.
5. BASED ON MANAGEMENT ESTIMATES, SUBJECT TO CHANGE
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21 retail licenses1
and counting
OWNED RETAIL
1 Includes licenses awarded for additional locations and pending transactions.14
12 current dispensary
locations across 6 states
IL PA OH NV AZ NY MA TOTAL / AVG
# STORES 5(3) 6(1) 1 1 1(3) 4(3) 3(3) 21
# PATIENTS ( 4 ) 60k 80k 30k(2) N / A 160k 75K 55K 404k
EST. 2020E
PATIENTS250k 250k 150k N / A 200k 250K N / A 1.1M
POPULATION 13M 13M 12M 3M 7M 20M 7M 75M
TOURISTS 114M 40M 43M 43M 44M 244M 28M 556M
M EDICAL Yes Yes Yes Yes Yes Yes Yes N / A
ADULT USE No No No Yes No No Yes N / A
CURRENT RETAIL OPERATIONS
1. REPRESENTS THE NUMBER OF AUTHORIZED POTENTIAL LOCATIONS.
2. MANAGEMENT EXPECTATIONS OF 2019 PATIENT COUNT.
3. SUBJECT TO CLOSING PENDING TRANSACTIONS.
4. MANAGEMENT ESTIMATE BASED ON AVAILABLE STATE DATA15
Average Revenue Per Square Foot
$6,500(1) $5,546(2) $2,951(2) $2,951(2)
1) CRESCO LABS INTERNAL UNAUDITED ANALYSIS
2) COSTAR RETAIL ANALYSIS JULY 2017
ATTRACTIVE RETAIL PERFORMANCE
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We have taken a CPG approach to
building brands
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OVERALL MARKET CRESCOLABS BRANDS
CURRENT CONSUMER LANDSCAPE AND PORTFOLIO
M E D I C I N A L
W E L L N E S S /
L I F E S T Y L E
H O L I S T I C
M E D I C I N E
R E G U L A R
L I F E S T Y L E
C O N N O I S S E U R
C R E S C O
R E M E D I R E S E R V E
R E L I E F
R E L I A B L ET R U S T
R E W A R D
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• BRAND ETHOS: WITH FAMIL IAR FORMATS AND PRECISE
DEL IVERY SYSTEMS, REMEDI PRODUCTS PROVIDE A SAFE,
CONSISTENT AND TRUSTED ALTERNATIVE TO TRADITIONAL
MEDIC INES.
• AUDIENCE: REMEDI WAS DESIGNED AS A REPLACEMENT OPTION
FOR TRADITIONAL MEDICATION TO SUPPORT THE CONSUMER
BASE THAT NEEDS IT ’S CANNABIS TO BE DISCREET, EASILY
IDENTIF IABLE, AND PRECISELY DOSED.
• PRODUCT PILLARS:
-CBD-FORWARD, NON-COMBUSTIBLE
-TRADITIONAL MEDIC INE DOSING FORMATS
-PACKAGING IS DESIGNED TO LOOK L IKE TRADITIONAL
MEDIC INE
APPROX. PERCENTAGE OF SALES: 15%
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R I S E R E F R E S H R E S T
• BRAND ETHOS : CRESCO ELEVATES
EVERYDAY CANNABIS . HIGH QUALITY.
TRUE CONSISTENCY. REMARKABLE
VALUE. CRESCO IS CANNABIS YOU CAN
COUNT ON THAT DEL IVERS
CONSISTENT CANNABIS PRODUCTS
EVERY T IME.
• AUDIENCE: CRESCO PRODUCTS ARE
IDEAL FOR PEOPLE WHO LOVE
TRADITIONAL CANNABIS FORMATS.
THIS IS THE CANNABIS BRAND FOR
THE STARBUCKS CUSTOMER — ABOVE
AVERAGE QUALITY BUT STILL
ACCESSIBLE TO EVERYONE.
• PRODUCT PILLARS:
-THC-FOCUSED, EVERY DAY CANNABIS
-PROPRIETARY COLOR CODED FOR
EASE OF USE
- ALWAYS IN STOCK, EVERY TIME
APPROX. PERCENTAGE OF SALES: 55%
• BRAND ETHOS: CONNOISSEUR-QUALITY CANNABIS DEMANDS HIGHER
EXPECTATIONS FROM CONSUMER AND CULTIVATOR AL IKE. FOCUSED ON
EXCLUSIVE GENETICS , CULTIVATION TECHNIQUE & ATTENTION TO
DETAIL , RESERVE IS MORE THAN CANNABIS - IT ’S A L IFESTYLE.
• AUDIENCE: FANS OF RESERVE ARE HIGHLY SELECTIVE AND TURN TO
RESERVE FOR A LUXURY EXPERIENCE IN CANNABIS . THEY ARE
KNOWLEDGEABLE ABOUT CULTIVATION AND L INEAGE, EXTRACTION AND
HARDWARE. RESERVE DEL IVERS A SUPERIOR CANNABIS EXPERIENCE FOR
THOSE WHO ARE LOOKING FOR TRULY TOP SHELF CANNABIS .
• PRODUCT PILLARS:
-HAND-SELECTED STRAINS & PROPRIETARY GENETICS
-CONNOISSEUR CONCENTRATES & VAPE PENS
-TERPENE-RICH, THC FORWARD PRODUCTS
APPROX. PERCENTAGE OF SALES: 15%
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• BRAND ETHOS: HIGH QUALITY DESSERTS WITH NO CANNABIS FLAVOR,
CREATED BY THE ACCLAIMED PASTRY CHEF, MINDY SEGAL
• AUDIENCE: LOVERS OF DECADENT, CHOCOLATE-FORWARD, EDIBLE
FORMS OF CANNABIS , WHO WILL PAY A PREMIUM FOR SUPERIOR
PRODUCTS
• PRODUCT PILLARS:
- INFUSED WITH ODORLESS, FLAVORLESS DISTILLATE
-DECADENT DESSERTS INSPIRED BY MINDY’S RESTAURANTS
-EXCELLENT GIFT OR REPLACEMENT FOR WINE AT DINNER PARTIES
• Approx. Percentage of Sales: 5%
• BRAND ETHOS: FUN, FRUITY CONFECTIONS FOR EVERYDAY
ENJOYABIL ITY AND EFFECTIVENESS
• AUDIENCE: CONSUMERS THAT WANT A FUN AND APPROACHABLE TREAT
FROM A HIGH QUALITY PRODUCER
• PRODUCT PILLARS:
- INFUSED WITH WINTERIZED SATIVA, INDICA AND HYBRID OILS
-FUN, FRUITY FLAVORS
-GREAT QUALITY AND CONSISTENCY AT AN ACCESSIBLE PRICE POINT
• Approx. Percentage of Sales: 10%
MARKETING STRATEGY
• Awareness and education via out of home, social
media, and other channels equip consumers with
functional knowledge of the science and utility of
cannabis.
• Industry programming via patient help centers,
physician CME events, and robust informational
materials educate patients and the public.
Awareness & Education In-Store Experience Outreach
• A multi-brand product suite caters to unique
consumer needs and buyer profiles.
• Packaging designed to feature proprietary, benefit-
forward communication is informative and intuitive.
• Collateral, merchandising materials, sales
promotions, public marketing, and retail partner
management all contribute to the sales funnel.
• Key influencers help Cresco brands reach wider
audiences via social media and exclusive events.
• The nation-wide industry brand ambassador club offers
behind-the-scenes product access and release events.
• Dedicated customer service teams funnel product
feedback to quality assurance and other key functions.
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100%M A RKE T P E N E TRA TI ON
+28%(1)
M A RKE T SH A RE
100%M A RKE T P E N E TRA TI ON
+30%(2)
M A RKE T SH A RE
WE DRIVE WHOLESALE DISTRIBUTION EFFECTIVENESS
100%M A RKE T P E N E TRA TI ON M A RKE T SH A RE
TBD
(1) BASED ON DATA PROVIDED BY THE STATE OF ILLINOIS
(2) BASED ON DATA OBTAINED DIRECTLY FROM PA DISPENSARIES
RETAILINSIGHTS
DESIGN &DEVELOP
TEST &VALIDATE
OUR CAPABILITIES ALLOW US TO INNOVATE, LEARN, AND SCALE RAPIDLY
New Brands & Formats
Technology
Intellectual Property
New Product/Brand
Trials
Evaluation and
Improvements
Consumer Awareness
Trend Forecasting
Consumer Behaviors
Multi-states Access
Marketing Awareness
Continued Consumer and
Patient Feedback
SCALE
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SUSTAINABLE FINANCIAL PERFORMANCE
Q3 & YTD 2018 FINANCIAL RESULTS
NOTE: EBITDA IS A NON-IFRS MEASURE. PLEASE REFER TO
INVESTORS.CRESCOLABS.COM FOR THE DEFINITION
$16.3M
PROFORMA REVENUE
+335% YOY
$3.9M
NET INCOME
UP COMPARED TO A NET
LOSS OF $0.2M IN Q3 2017
$5.3M
ADJ. EBITDA
UP COMPARED TO ADJUSTED
EBITDA OF $0.1M IN Q3 2017
YTD 2018NINE MONTHS ENDED 9/30/18
PROFORMA REVENUE
$35.1M
NET INCOME
$6.5M
ADJ. EBITDA
$8.1M
Q3 2018THREE MONTHS ENDED 9/30/18
+248% YOY UP COMPARED TO A NET
LOSS OF $0.9M IN YTD 2017
UP COMPARED TO ADJUSTED
EBITDA OF -$0.8M IN YTD 2017
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• On December 6th, 2018, Cresco Labs announced a definitive agreement to acquire 100% membership interests of Hope Heal Health, based in Massachusetts with licences for
cultivation, processing, and the ability to obtain up to three medical marijuana dispensary licenses and three adult-use dispensary licenses.
• On December 7th, 2018 Cresco Labs announced three new marketing appointments to accelerate the aspiration to become the leading brand builder within the cannabis
industry, those hires include: Greg Butler as CMO, former Vice President of Growth Strategy and Marketing for MillerCoors, Cory Rothchild as Vice President of Brand
Marketing, former Vice President and Brand Director for Gatorade, and Chis Rivera as Vice President of Marketing, formerly of Senior Director of MillerCoors Craft division.
• On December 12th, 2018 Cresco Labs announced that Co-founder and CEO, Charles Bachtell, was appointed to the Cannabis Legalization Subcommittee of Illinois Governor-
elect JB Pritzker’s transition team to lead the efforts for adult use legalization.
• On December 12th, 2018, Cresco Labs announced that it had been granted the first approval to operate a marijuana dispensary in the state of Ohio.
• On December 19th, 2018, Cresco Labs announced that it had been awarded a second merit-based license for dispensary operations in Pennsylvania which allows us to open
three additional dispensary locations.
• On December 20th, 2018, Cresco Labs announced that it had signed dual definitive agreements to acquire licensed Illinois medical cannabis dispensaries MedMar Rockford
and MedMar Lakeview bringing our total number of dispensaries in Illinois to five.
• On January 16th, 2019, Cresco Labs announced that it had made the first legal sale of medical marijuana in the state of Ohio.
• On January 28th, 2019, Cresco Labs announced that it had appointed Dun & Bradstreet CEO Tom Manning as Chairman of its Board of Directors. Mr. Manning has been a
member of Cresco Labs' board since 2016 and was formerly the CEO of Cerberus Capital Asia, Capgemini Asia, and Ernst & Young Consulting Asia and was also a senior partner
at Bain & Company.
• On January 30, 2019, Cresco Labs opened a manufacturing facility and two dispensaries in the state of New York.
• On February 1, 2019, the IL program implemented the Alternative to Opioids Act which removed finger printing, background checks and provides same day access for patients.
• On February 5, 2019, Cresco Labs announced that its Mindy’s Kitchen brand has been ranked the top selling edible in Nevada according to Headset.
• On February 25, 2019, Cresco Labs announced the formation of a new hemp CBD subsidiary, Well Beings, that will provide the Company the ability to expand its house of
branded products to all 50 states to potentially reach a new customer base outside of the licensed dispensary channel.
• On February 26, Cresco Labs announced the opening of a third Pittsburgh area dispensary and launched online ordering in Western Pennsylvania.
• As of February 28th, 2019, Cresco Labs stock is up over 50% from the launch price.
RECENT BUSINESS DEVELOPMENTS
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