Grass Roots Business Plan A

BUSINESS PLAN 2019

N OT I C E 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 Grass Roots Business Centre Ltd. (“Grass Roots” 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:

This Business Plan was prepared by:

Bob Hayre Grass Roots Business Centre Ltd. 7364 Trans-Canada Highway, North Cowichan, BC V9L 6A1 Canada Tel: (604) 807-5788 Email: bob@logitrack.ca

Concord Business Development Inc. 500-666 Burrard Street Vancouver, BC V6C 3P6 Canada Tel: (604) 689-2556 Email: info@concordbusiness.com Website: www.concordbusiness.com

BUSINESS PLAN HIGHLIGHTS

1 2

NAME OF COMPANY

Grass Roots Business Centre Ltd.

LOCATION

7364 Trans Canada Highway North Cowichan, BC V9L 6A1 Canada

BUSINESS

Grass Roots is an innovative real estate developer with plans to acquire, develop and manage compliant cultivation facilities, industrial properties and real estate for the cannabis industry.

UNITS UNDER MANAGEMENT

12 units (232.2 m2 each, with 54.6 m2 of canopy per unit)

MARKET SIZE

According to Statistics Canada, sales of Cannabis have been over $100 Million1 per month since July 2019. Pot sales in Canada could reach $3.16 Billion in 2020 according to Canaccord2, with new cannabis-infused products such as edibles, topicals and extracts.

THE OPPORTUNITY

Grass Roots is uniquely positioned to address the challenges in the current Canadian cannabis climate, namely: 1. Health Canada’s requirement for a fully built and compliant site before submitting a licence application.

2. The barriers of entry for smaller cultivators or craft growers seeking access to the regulated Canadian market is too high due to the cost of real estate and compliant construction.

CAPITAL REQUIRED

$10,000,000

REAL ESTATE INCOME

Year 1: $1,440,000, Year 2: $2,923,200, Year 3: $2,967,048, Year 4: $3,011,554, Year 5 $3,056,727.

https://www150.statcan.gc.ca/n1/pub/11-621-m/11-621-m2019005-eng.htm https://www.bnnbloomberg.ca/sales-in-canada-s-pot-sector-forecast-to-hit-3-16b-in-2020-amid-slower-growth-canaccord-1.1340822

TA B L E O F C O N T E N T S EXECUTIVE SUMMARY

01

THE OPPORTUNITY

19

Company Overview

02

Canadian Market

20

Location

03

Demand for Craft Cannabis

21

The Opportunity

05

Economic Interest

23

Financial Summary

06

Real Estate Compliance

24

CORPORATE OVERVIEW

07

Emergence of Cannabis

25

Corporate Data

08

OUTREACH & AWARENESS

26

Mission and Vision

09

Community Support

27

Directors

10

Education and Awareness

28

Strategic Alliances

11

FINANCIAL ANALYSIS

29

OPERATIONS OVERVIEW

12

BIBLIOGRAPHY

40

Operation Folios

13

APPENDIX

43

Site and Location

14

The Facility

15

Municipality Compliance

17

Cannabis Act Compliance

18

GRASS ROOTS BUSINESS PLAN | 01

EX ECUT IVE S U M M A R Y

GRASS ROOTS BUSINESS PLAN | 02

C O M PA N Y OV E RV I E W Grass Roots Business Centre Ltd. (“Grass Roots” or “the Company”) is a real estate investment company focused on the legal Canadian cannabis industry. The Company plans to leverage its networks, expertise and sound real estate fundamentals for the development, and management of a state-of-the-art multi-tenant facility for cannabis cultivation.

On a 1.7 acre site of land secured off the Trans Canada Highway, in North Cowichan, British Columbia, the Company plans to develop twelve microcultivation units (limited to 200 square metres of canopy space) that it will lease to licensed producers.

Alongside the acquisition of coveted land on Vancouver Island, Grass Roots is uniquely positioned to expand in BC, with future plans to develop Cannabis centric real estate projects across Canada and other global marketplaces.

Health Canada’s latest changes (a build-first application model) prevents growers and entrepreneurs without capital or expertise to build first, effectively excluding them from legally entering the cannabis cultivation market.

GRASS ROOTS SEEKS TO HELP CRAFT GROWERS TRANSITION TO THE LEGAL SPACE BY PROVIDING BOTH ACCESS TO PURPOSE BUILT FACILITIES AND REQUIRED EXPERTISE.

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LO C AT I O N The Grass Roots property sits on 1.7 acres of cannabis-growing approved land in North Cowichan, BC (zoned C3: Commercial Service Zone.) (see: Appendix A.) The property will house twelve micro-facilities once fully complete.

PORT HARDY

TOTAL SITE AREA 6,994 square metres, or 1.7 acres BUILDING AREA 603.9 square metres SINGLE UNIT AREA 232.2 square metres SINGLE UNIT CANOPY SPACE 197.3 square metres

NANAIMO

GRASS ROOTS BUSINESS CENTRE 69 km or 50-60 minutes from Victoria

VICTORIA

GRASS ROOTS BUSINESS PLAN | 04

G R A S S R O OT S I N I T I A L R E A L E S TAT E P R O J E C T 12 UNITS

8

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THE OPPORTUNITY In October 2018, Canada became the 2nd country in world after Uruguay and the first G8 nation to fully legalize cannabis on a national level. Precisely a year later, in October 2019, the country legalized cannabis-based edibles, beverages and combustible oil products.

As the legal market and its legislative frameworks continue to evolve, public officials continue to hold the responsibility of balancing health, safety, and revenue as they strive to undermine the illicit market, ensure a safe and controlled supply, and maintain quality in a licensed facility that meets regulators prerequisites.

While the nascent marketplace works through its national integration, cultivators and consumers alike have been met with distinct challenges:





Health Canada’s updated requirements for a micro-cultivation licence render such licence unobtainable for growers and entrepreneurs who do not have access to capital.

Operations built for mass production are inherently unable to satisfy the demand for high-quality products.



Cannabis real estate projects price above market.



Cannabis property deals may be more lucrative than other industrial transactions, but they are also more complicated and Grass Roots knows the landscape.

With its strong foundation of resources in the real estate sector, and its alliances in the Cannabis sector, Grass Roots is uniquely positioned to provide solutions for and support Canadians who desire to legally participate in the cannabis marketplace and economy: Grass Roots’ primary mission is to utilize its resources and alliances to support craft growers through the barriers of entry, including land acquisition, facility development, business knowledge, licensing, and invaluable expertise.

Grass Roots’ is in a position to expand its operations through its strategic relationships with well-respected distribution partners, The Company seeks to cater to and support craft cannabis cultivators that produce premium, high-quality products, Providing access to cannabis cultivation at a competitive price will be key in driving out the illicit market. Grass Roots will use costeffective cultivation methods to produce cannabis at a competitive price, all while preserving quality and safety (i.e. no pesticides.)

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F I N A N C I A L S U M M A RY The Grass Roots Business Centre will manage and support twelve micro-cultivators who will lease single-unit space from the Company. Grass Roots will generate rental income of $20,000 per month per unit, with a 1.5% per annum increase. The lessees, or individual micro-cultivation companies, will be responsible for their own utilities (e.g. energy, water, etc.)

REVENUE SUMMARY Total Revenues Total Operating Expenses

Year 1 $ 1,440,000 $ 994,360

Operating Income (EBITDA)

$

445,640

$ $

Year 2 2,923,200 1,426,860

$

1,496,340

$ $

Year 3 2,967,048 1,444,360

$

1,522,688

$ $

Year 4 3,011,554 1,461,860

$ $

Year 5 3,056,727 1,479,360

$

1,549,694

$

1,577,367

TOTAL REVENUES & OPERATING INCOME $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $-

Year 1

Year 2

Total Revenues

Year 3

Operating Income (EBITDA)

Year 4

Year 5

GRASS ROOTS BUSINESS PLAN | 07

COR POR AT E O V E R V I E W

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C O R P O R AT E DATA LEGAL NAME OF COMPANY

Grass Roots Business Centre Ltd.

DATE OF INCORPORATION

July 03, 2019

COUNTRY OF INCORPORATION

Canada

PRINCIPAL ADDRESS OF BUSINESS

7364 Trans Canada Highway North Cowichan, BC V9L 6A1 Canada

TELEPHONE

+1 (604) 807-5788

LEGAL COUNSEL

Sunny Ajula – Hamilton Duncan

ACCOUNTANT & AUDITOR

Sindy Wong – Smythe CPA

CHIEF EXECUTIVE OFFICER

Bob Hayre

DIRECTORS

Nathan Campbell, Jerry Purewal, Balprit Gill, Rob Hentze

GRASS ROOTS BUSINESS PLAN | 09

MISSION Grass Roots Business Centre’s mission is to develop and build, maintain and manage real estate in value-added Cannabis cultivation sector.

VISION Grass Roots is a real estate company to the cannabis sector, that seeks to leverage its strategic relationships and resources to:

 Enhance shareholder value by investment into the high value cannabis real estate sector.  Support the transition of craft cannabis growers into the legal market,  Facilitate the production of quality cannabis products at cost-effective prices,  Unite a consortium of companies that directly benefit the local economy and community.

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G R A S S R O OT S D I R E C TO R S BOB HAYRE

Bob Hayre is a savvy and seasoned business professional, pulling from a depth of knowledge from his years of experience as the general manager and CEO of Logitrack Systems Inc. Logitrack develops a suite of systems that help collect data and detailed transaction information in real-time, connecting all aspects of the production process under one wireless umbrella, including harvest and production data, label and code printing, food logistics as well as security. Bob Hayre brings his extensive experience from working in the industrial automation sector to the Grass Roots team. Mr. Hayre is also skilled in: negotiation, management, product development, and cross-functional team leadership.

JERRY PUREWAL

Jerry Purewal started in the banking sector as a senior analyst over 20 years ago, then entered into the real estate business.

Currently, he has diversified into many businesses, including large-scale agriculture operations. He is experienced and successful with both small and large-scale planned-community developments. His experience in multiple countries has given him valuable experience in his business ventures.

BALPRIT GILL

Balprit Gill is a Project Manager and business owner with over a decade of experience working in construction, land development and trucking-related industries. Drawing from his degree in Professional Communications and extensive experience leading large teams to achieve shared goals, Mr. Gill has proven that he is solutions-oriented with the leadership skills required to get measurable results within a team setting.

NATHAN CAMPBELL

Co-founder of both the Grass Roots brand and the Cannabis Cup, Mr. Campbell has grown the business from a family-farm operation to an internationally recognized brand, renown for creating top-shelf products. As a member of BC Craft Supply, Nathan has substantial experience transitioning cannabisbased companies into legitimate operations.

ROB HENTZE (MASTER GROWER)

Rob Hentze is a certified Master Grower with over 15 years of experience in cannabis retail, consulting, and cultivation. He has been responsible for efficiently managing production operations in large-scale commercial and retail facilities, as well as design and troubleshooting for some of the more recognized cannabis facilities in the Canadian market.

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S T R AT EG I C A L L I A N C E S

Pasha Brands is a brand house which owns several prohibition-era cannabis production brands. Pasha Brands 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. Members of the Pasha Brands family include:  B.C. Craft Supply Co., a final-stage applicant under Health Canada’s regulations to become a processor and seller of cannabis products;  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.

For over a decade, Cannabis Compliance Inc. has lived and breathed commercial cannabis operations in Canada, advising on everything from genetics sourcing, cultivation, security and facility design, to quality assurance, regulatory licensing and business planning.

To date, CCI has assisted 100+ companies in their efforts to achieve a production licence.

BC Craft Supply Co. is a subsidy of Pasha Brands.

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OPER AT IONS O V E R V I E W

GRASS ROOTS BUSINESS PLAN

GRASS ROOTS BUSINESS PLAN | 13

O P E R AT I O N F O L I O S Build and Manage State-of-the-Art Micro Cannabis Cultivation Facilities for Lease

Contract & Oversee Construction & Development

Process Rental Income & Expense Payments

Acquire & Manage Licensed Tenants

Supervise Property Maintenance, Repairs, & Utilities

Manage Communication & Compliance With Tenants

Maintain Property Compliance With Regulatory Groups

17

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S I T E A N D LO C AT I O N Nestled in the pristine cannabis-growing region of Vancouver Island, the North Cowichan location has been strategically selected to effectively accommodate south and north island communities. Grass Roots Business Centre will function as the gateway for micro-cultivators’ entry into the regulated Canadian cannabis market. In doing so, the Company will be actively supporting and stimulating the local economy in the City of Duncan and surrounding regions.

Vancouver Island has been used by generations of cannabis farmers for growing and establishing their harvesting techniques and sharing their knowledge throughout the island communities. These techniques are unparalleled and known throughout the world.

The Company now seeks to assist these underground communities, enabling them to establish their place in the legal cannabis market.

The property sits on 1.7 acres of cannabisgrowing approved land. The property will house 12 micro-facilities once fully complete.

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T H E FAC I L I T Y

C O M P L E T E S I T E L AY O U T

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T H E FAC I L I T Y

FLOOR LEVEL 1

SINGLE UNIT DESIGN Each individual unit will feature:

 Grow Rooms with 2,124 ft2 of canopy space,  A Drying Room,  A Trimming or Product Packaging Room (Multi-Use Space),  Sanitation and Decontamination Areas,  Designated Space for Security Equipment,  Secured Storage Space,  A Shipping & Receiving Area,  Office Space.

FLOOR LEVEL 2

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M U N I C I PA L I T Y COMPLIANCE Grass Roots will adhere to all regulations and bylaws set forth by the Municipality of North Cowichan. This includes zoning bylaws (outlined on the right), noise bylaws, waste collection bylaws, and all other applicable ordinances.

Grass Roots’ acquired property is zoned Commercial Service Zone (C3), wherein a MicroCannabis Production Facility is permitted. As per Zoning Bylaw No. 2950, a MicroCannabis Production Facility is defined as: a cannabis production facility authorized by a micro-license under the Cannabis Act and its regulations.

COMMERCIAL SERVICE ZONE (C3) Minimum Lot Size:

Minimum Setbacks:

The minimum permitted lot size for the C3 zone is 560 m2

The minimum permitted setbacks for the C3 zone are:

Minimum Frontage: The minimum permitted frontage for the C3 zone is 15.0 metres Maximum Lot Coverage: The maximum permitted lot coverage for the C3 zone is 50% of the lot area.

Maximum Building Height: The maximum permitted building heights for the C3 zone are: Principal Buildings (12.0 metres) Accessory Buildings (5.0 metres)

Principal Buildings: Yard, Front (8.0 metres), Yard, Side (one only) (5.0 metres); Accessory Buildings and Structures (excl. fences): Yard, Front (8.0 metres), Yard Side (one only) (1.0 metres); Where a lot line, side, of a lot abuts residentially-zoned land, the yard, side, shall be maintained on that side adjacent to such residentially zoned land; Where the lot line, rear, of a lot abuts residentially-zoned land the required yard, rear, shall be 8.0 metres.

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C A N N A B I S AC T C O M P L I A N C E The Grass Roots executive team (along with the Company’s partners) employ both a wealth of knowledge in the cannabis cultivation space and an unrelenting commitment to the safe production of cannabis products. As such, the Company will ensure all twelve individual operations will be fully compliant with the Cannabis Act and Health Canada’s regulations as they evolve. These include, but are not limited to: PHYSICAL SECURITY

 Restricted Access: Designated operations areas will be accessible only to individuals whose presence in the area(s) are required by their duties (e.g. Master Grower, budtender, etc.)  Physical Barriers: Operations areas will be surrounded by physical barriers that prevent unauthorized access.  Visual Monitoring & Recording: The perimeter of each unit will be monitored in order to detect unauthorized access.

STANDARD OPERATING PROCEDURES

 As per the Cannabis Act, all cannabis will be produced, packaged, labelled, distributed, stored sampled and tested in accordance to Standard Operating Procedures (SOPs)

AIR FILTRATION

 Each unit will be constructed in a manner where air can be filtered to prevent the escape of odours.

EQUIPMENT

 All equipment intended for cannabis production will be designed, maintained and operated in a manner that permits the effective cleaning of its surfaces, permits it to function in accordance with its intended use, prevents contamination of the plant and prevents the addition of extraneous substances to the product.

While each individual cultivator will be responsible for their own operations and adherence to the Cannabis Act, Grass Roots will establish protocols for managing and monitoring the premises to ensure compliance across all units. The Company seeks to continuously uphold its commitment to both the consortium of growers and the surrounding communities.

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THE OPPORT UNIT Y M A R K E T

A N A L Y S I S

GRASS ROOTS BUSINESS PLAN | 20

CANADIAN MARKET

Within the first five and a half months following legalization, Canadian governments earned $186 million from excise taxes and general taxes on goods and services directly related to the sale of cannabis.5 Since then, active cultivation area increased from 698,224 square metres in March 2019 to 1,551,440 square metres in June 2019.6 Furthermore, with cannabis production totaling 106,038 kg from April to June, the average output equaled 157.49 kg per square foot.

According to Statistics Canada, retail sales of Cannabis have been over $100 Million per month since July 2019 with sales of $135 Million in the month of November 2019.

In the first year since legalization, legal sales reached almost $1 Billion. The legal consumer market is expected to uphold its momentum as Canada also legalized the sale of seven new classes of cannabis products on October 17, 2019.

1,800,000 1,600,000 SQUARE METRES

With federal legalization having established a turning point in the global cannabis market, Canada has become a stronghold for cannabis consumption and demand, with $5.9 billion having been spent in 2018 alone.4

ACTIVE CULTIVATION AREA

1,400,000

122.2%

1,200,000 1,000,000 800,000 600,000 400,000 200,000 0

MARCH 2019

JUNE 2019

March ‘19

June ‘19

7,515,621 ft2

16,699,561 ft2

Dried Flower

35,258 kg

52,765 kg

Cannabis Oil

45,853 kg

53,273 kg

Total Cannabis

81,111 kg

106,038 kg

92.66 kg/ft2

157.49 kg/ft2

Area

Output

Source: Statistics Canada, 2019.

“Canadians spending $5.9B on pot, mostly from black market” Bloomberg, March 2019.

“At a glance: Government revenues from the sale of cannabis, March 2019” Statistics Canada, June 2019.

6 “Cannabis market data.” Statistics Canada, August 2019.

7 “National Cannabis Survey, third quarter 2019” Statistics Canada, October 2019.

4 5

GRASS ROOTS BUSINESS PLAN | 21

THE DEMAND FOR CRAFT CANNABIS In 2018, with estimated sales of $5.9 billion8, the illicit market accounted for almost 80 percent of the Canadian cannabis market. The legal market was estimated at $1.2 billion and is currently plagued by a lack of distribution infrastructure.

Critical errors were made by the first wave of large licensed producers, namely the retrofitting of existing facilities and the building of overly large grow areas, combined with underestimating the stringent climate control requirements.

These factors have caused high levels of crop failure. Due to a limited number of cannabis professionals, new facilities were built using experience from other industries where cannabis' unique requirements were not well understood. As a result, there is a shortage of high-quality cannabis products.

Grass Roots has the opportunity to capitalize on opportunities that other LP’s and large publicly-traded companies have failed to capture. Organic cannabis fills a market gap that has been left void by the corporate first-movers that currently dominate the Canadian marketplace. Operations built for mass production are inherently unable to satisfy the demand for high-quality products.

As a testament to the value of this niche, Broken Coast, Whistler Medical and CannaFarms, three small-scale craft cannabis operations, have been acquired for $230M9, $170M10 and $130M11, respectively. Furthermore, there are estimated to be about 6,000 craft growers in British Columbia alone, a region that has a strong history of cultivating cannabis and is known for its world-renowned ‘BC Bud.’ Licensing just 15 percent of craft cultivator operations could legitimize nearly $3 billion in cannabis sales in only two years12.

“Canadians spending $5.9B on pot, mostly from black market” Bloomberg, March 2019.

“Aphria buys Broken Coast Cannabis in $230 million stock and cash deal” Financial Post, January 2018.

10 “Aurora Cannabis buying Whistler Medical Marijuana in deal worth up to $175 million.” Financial Post, January 2019.

11 Press Release: VIVO Cannabis Inc, 2018.

12 “Freeing craft cannabis from 'grey market' worth $3 billion to B.C: report” Vancouver Sun, June 2019.

8 9

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THE DEMAND FOR CRAFT CANNABIS Quality cannabis demands a premium price point, and reflects the consumer demand for a high-quality craft product13. According to the Craft Cannabis Association of BC, craft growers give the consumer healthier choices, the community benefits from the culture and the economic advantages of the operation, and the product is sustainable into the long-term.

13

HEALTH Local and small-scale craft cannabis production means consumers are directly connected with the producers of each and every product, ensuring high quality practices, broader range of choices and unique medicinal solutions.

ECONOMY The cannabis industry is worth billions of dollars to Canadians. At this moment in time, provinces and municipalities alike have a powerful opportunity to sustain and diversify the economy with meaningful employment and substantial tax revenues.

COMMUNITY Canadian communities are poised to benefit from a thriving cannabis culture and tradition. Local socio-economic activity associated with the industry creates a strong foundation for community development.

SUSTAINABILITY Cannabis is a renewable agricultural resource.

Post-prohibition allows for further expansion of innovative applications, creating products and that aids in the transition toward a regenerative society.

“Canadian cannabis extracts industry set to ‘explode this fall” Marijuana Business Daily, April 2019.

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E C O N O M I C I N T E R E S TS $570,000 - $836,000 Potential annual wages for full-time employees

20 - 25 Full-time employment opportunities at Grass Roots, excluding seasonal workers, as well as contractors and consultants

DIRECT IMPACT Tax Revenue, Vertical Economic Integration, Transition from illicit to legal market (consumers and operators alike)

Within Canada, cannabis production is a lucrative and expanding industry that offers significant economic potential for the Municipality of North Cowichan. Under Health Canada’s regulations, each micro-cultivation facility could employ between 3-5 individuals, as each production facility requires (at minimum): Head of Security, Master Grower, and Quality Assurance Person. It has been noted that during harvest times (approximately every 60 days,) there may be a need for seasonal or part-time employees.

The average salary for cannabis employees across Canada is approximately $38,000 per year14, or $20.00 per hour.

For Grass Roots, it is anticipated that each of the 12 microcultivation sites will need 2 to 3 staff members working part-time for 4 hours a day, 6 days a week. Taking into consideration all 12 units, this translates to approximately 20 to 25 full-time positions, or $760,000 to $950,000 in potential annual wages – this not including seasonal workers or contractors offering specialty services (e.g. electricians, HVAC specialists, security consultants and more.)

Furthermore, harvesting the rooms would require an additional crew of 6 to 9 people. With 48 rooms in the complex, harvesting on an 8-week schedule would mean that the crew has consistent employment opportunities and is engaged on a daily basis.

14 Indeed,

October 2019.

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R E A L E S TAT E C O M P L I A N C E Health Canada’s 'build first' policy is a blow to the craft cannabis industry. B.C.’s small cannabis farmers have to spend up to $2 million each to meet federal regulations before they can even think of applying for a government licence.

This helps to open up the market for Craft Growers and help them to enter the legal cannabis trade. By renting form Grass Roots, the Craft Growers will be fully compliant with Health Canada regulations and be able to obtain a legal license.

Grass Roots plans to develop real estate that has been purpose- Licensing just 15 percent of craft cultivator operations could built to government compliant requirements, and lease it to Craft legitimize nearly $3 billion in cannabis sales in only two years15.

Growers.

Multi Unit Purpose-Built Real Estate Development in the Cannabis Sector

15

Indeed, October 2019.

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THE EMERGENCE OF CANNABIS R E A L E S TAT E With cannabis, there are only so many locations and spaces available for cultivators, particularly in British Columbia where much of the pristine land is preserved and protected from industrial use. As such, cannabis-related commercial real estate has offered attractive opportunities for: i) growers seeking entry into the cultivation space, ii) entrepreneurs pursuing profitable ventures and (iii) shareholders seeking healthy ROIs. Statistics show that cannabis property deals may be more lucrative than other industrial transactions15, and recent deals across North America highlight this fact (see below.) While many such transactions have occurred in the United States, it can be determined that Canada’s federal legalization will act as a catalyst for this new, emerging sector.

Press Release: Sept. 27, 2019

Press Release: Sept. 12, 2019

Press Release: Feb. 13, 2019

CRESCO LABS TO SELL ILLINOIS FACILITIES TO CANNABIS REIT FOR $46.3 MILLION

NEW CANNABIS REAL ESTATE COMPANY NEWLAKE RAISES $85.5 MILLION

CANNABIS REIT SUBSIDIARY MARKETS $100 MILLION PRIVATE PLACEMENT OFFERING

Cresco Labs Enters Into Sale-andLeaseback Agreement With Innovative Industrial Properties for Chicago, Illinois Facilities

NewLake Announces $85.5 Million Capital Raise For Newly Formed Real Estate Company (Chicago, Illinois)

IIP Operating Partnership, LP Commences Offer of Exchangeable Senior Notes (San Diego, California)

Source: New Cannabis Ventures (Multiple), 2019.

15

“Industrial Sector Remains ‘Red Hot’ Despite Headwinds” National Real Estate Investor, April 2019.

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OUT R EACH &

A W A R E N E S S

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COMMUNITY SUPPORT Located on Vancouver Island, the Municipality of North Cowichan is the largest municipality in the Cowichan Valley Regional District and is deemed a “community of communities,” including Chemainus, Crofton, Maple Bay and the South End. The region is home to hard-working, adaptable communities that have transitioned from mining to lumber, then paper and pulp throughout its history. The region’s resilience paired up with the Cowichan Valley's prolific contribution to the world famous "BC Bud" brand perfectly aligns with Grass Roots’ core values of quality and community. This will be the foundation upon which the Company builds its communication strategies.

The team at Grass Roots has decades of cannabis cultivation experience and the unique knowledge that will make the Company stand apart. Having decades of experience also means that Grass Roots has spent decades building deep and meaningful relationships inside the Canadian cannabis community. The Company will leverage these longstanding relationships to build up the cannabis industry and help it achieve normalization.

Grass Roots will showcase its leadership position through social responsibility, transparency, accessibility, and focus on education. Ongoing outreach, engagement and interactions with the cannabis community will create a broad network of like-minded consumers and businesses. Grass Roots is also focused on being a knowledge center and cultivation hub, and those efforts will create a brand story built on goodwill, expertise, and social responsibility.

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E D U C AT I O N A N D AWA R E N E S S Grass Roots strongly believes that the cannabis consumer is being underserved when it comes to public information and advocacy. Mainstream media is ill-equipped to report on cannabis and the current crop of legal companies can have a very corporate approach.

Small businesses also lack representation, with the only significant industry associations being focused on corporate concerns and the medical market.

As such, the Company will actively support associations and educational institutions that are focused on consumer knowledge, product quality, small business advocacy and industry training. This support will come in a variety of ways, including monetary support, providing internships, participation in expert panels, and marketing.

BC INDEPENDENT CANNABIS ASSOCIATION The BCICA is a not-for-profit advocacy group that focuses on public information, holding panel sessions that consist of industry experts addressing complex topics surrounding cannabis.

CRAFT CANNABIS ASSOCIATION OF BC CCABC is an advocacy group for small-scale producers throughout BC. Currently acting primarily as a lobby group, the introduction of micro-license categories offers the opportunity to become a multi-faceted industry.

NATIONAL INSTITUTE FOR CANNABIS HEALTH AND EDUCATION NICHE as an educational not-for-profit focused on getting science-based knowledge into the hands of regulators and reducing the stigma around cannabis in general.

CANADIAN FEDERATION OF INDEPENDENT BUSINESSES The CFIB is a non-profit business organization representing the interests and concerns of over 110,000 Canadian owners of small and mid-size enterprises (SMEs) to all three levels of government.

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F INANCIAL A N A L Y S I S

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GRASS ROOTS BUSINESS PLAN

FINANCIAL ANALYSIS

C A P I TA L R EQ U I R E M E N T CAPITAL REQUIREMENT Year 1

Building & Equipment Land Building Frame & Cladding Concrete-Formed Foundation Hydro Landscaping, Paving, & Septic Plumbing & Electrical Architectural & Engineering Construction General Contractor Civil Construction Subtotal Office & Admin City Fees Contingencies Consultants Subtotal

$ $ $ $ $ $ $ $ $ $

850,000 4,500,000 625,000 750,000 340,000 500,000 300,000 500,000 1,000,000 9,365,000

$ $ $ $

135,000 200,000 300,000 635,000

Total $

10,000,000

34

GRASS ROOTS BUSINESS PLAN | 31

R E V E N U E S U M M A RY REVENUE SUMMARY Total Revenues Total Operating Expenses

Year 1 $ 1,440,000 $ 994,360

Operating Income (EBITDA)

$

445,640

$ $

Year 2 2,923,200 1,426,860

$

1,496,340

$ $

Year 3 2,967,048 1,444,360

$

1,522,688

$ $

Year 4 3,011,554 1,461,860

$ $

Year 5 3,056,727 1,479,360

$

1,549,694

$

1,577,367

TOTAL REVENUES & OPERATING INCOME $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $-

Year 1

Year 2

Total Revenues

Year 3

Operating Income (EBITDA)

Year 4

Year 5

GRASS ROOTS BUSINESS PLAN | 32

I N C O M E S TAT E M E N T INCOME STATEMENT Revenues Rental Revenues Total Revenues Operating Expenses Utilities Insurance Legal & Accounting Mortgage Security Building Maintenance Project Management Property Tax Total Operating Expenses Operating Income Depreciation Pre-tax Income Income Tax Net Income

Year 1

Year 2

Year 3

Year 4

Year 5

$ $

1,440,000 1,440,000

$ $

2,923,200 2,923,200

$ $

2,967,048 2,967,048

$ $

3,011,554 3,011,554

$ $

3,056,727 3,056,727

$ $ $ $ $ $ $ $ $ $ $ $ $ $

24,000 17,500 60,000 300,000 200,000 100,000 150,000 142,860 994,360 445,640 445,640 89,128 356,512

$ $ $ $ $ $ $ $ $ $ $ $ $ $

26,000 18,000 25,000 600,000 210,000 105,000 300,000 142,860 1,426,860 1,496,340 1,496,340 299,268 1,197,072

$ $ $ $ $ $ $ $ $ $ $ $ $ $

28,000 18,500 25,000 600,000 220,000 110,000 300,000 142,860 1,444,360 1,522,688 1,522,688 304,538 1,218,150

$ $ $ $ $ $ $ $ $ $ $ $ $ $

30,000 19,000 25,000 600,000 230,000 115,000 300,000 142,860 1,461,860 1,549,694 1,549,694 309,939 1,239,755

$ $ $ $ $ $ $ $ $ $ $ $ $ $

32,000 19,500 25,000 600,000 240,000 120,000 300,000 142,860 1,479,360 1,577,367 1,577,367 315,473 1,261,894

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R E T U R N O N I N V E ST M E N T PROFITABILITY & ROI Revenue Gross Margin Gross Margin (%) Net Income Net Profit Margin (%) Initial Investment 5-Year ROI

5-Year Annualized ROI

$ $ $ $

Year 1 1,440,000 1,440,000 100% 356,512 24.76% 10,000,000 3.6%

$ $ $ $

Year 2 2,923,200 2,923,200 100% 1,197,072 41% 12.0%

$ $ $ $

Year 3 2,967,048 2,967,048 100% 1,218,150 41% 12.2%

$ $ $ $

Year 4 3,011,554 3,011,554 100% 1,239,755 41% 12.4%

$ $ $ $

Year 5 3,056,727 3,056,727 100% 1,261,894 41% 12.6%

-12.01%

5 -YEAR ROI 12.0%

12.2%

12.4%

12.6%

YEAR 2

YEAR 3

YEAR 4

YEAR 5

3.6%

YEAR 1

GRASS ROOTS BUSINESS PLAN | 34

C A S H F LOW CASHFLOW STATEMENT Year 1

Year 2

Year 3

Year 4

Year 5

Operating Activities Net Income Subtotal Accounts Payables Other Operating Subtotal Operating Cash flow Capital Expenditures Other Assets Spending Cash after Investing Other Long-Term Debt Dividends Paid Increases in APIC Capital Stock Other Financing Cash after Financing Beginning Cash Cashflow

$ 356,512 $ 356,512 $ 49,718 $ (635,000) $ (585,282) $ (228,770) $ (9,365,000) $ $ (9,365,000) $ $ $ $ 10,000,000 $ $ 10,000,000 $ $ 406,230

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

1,197,072 1,197,072 71,343 71,343 1,268,415 406,230 1,268,415

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

1,218,150 1,218,150 72,218 72,218 1,290,368 1,674,645 1,290,368

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

1,239,755 1,239,755 73,093 73,093 1,312,848 2,965,013 1,312,848

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

1,261,894 1,261,894 73,968 73,968 1,335,862 4,277,861 1,335,862

Year End Cash

$

$

1,674,645

$

2,965,013

$

4,277,861

$

5,613,723

406,230

GRASS ROOTS BUSINESS PLAN | 35

BALANCE SHEET BALANCE SHEET STATEMENT Cash Other Operating Total Current Assets Capital Expenditures Total Fixed Assets Total Assets

$ $ $ $ $ $

Year 1 406,230 635,000 1,041,230 9,365,000 9,365,000 10,406,230

$ $ $ $ $ $

Year 2 1,674,645 635,000 2,309,645 9,365,000 9,365,000 11,674,645

$ $ $ $ $ $

Year 3 2,965,013 635,000 3,600,013 9,365,000 9,365,000 12,965,013

$ $ $ $ $ $

Year 4 4,277,861 635,000 4,912,861 9,365,000 9,365,000 14,277,861

$ $ $ $ $ $

Year 5 5,613,723 635,000 6,248,723 9,365,000 9,365,000 15,613,723

Accounts Payable Total Current Liabilities Total Liabilities Shareholders' Equity APIC Capital Stock Other Financing Retained Earnings Total Equity

$ $ $

49,718 49,718 49,718

$ $ $

121,061 121,061 121,061

$ $ $

193,279 193,279 193,279

$ $ $

266,372 266,372 266,372

$ $ $

340,340 340,340 340,340

$ $ $ $ $

10,000,000 356,512 10,356,512

$ $ $ $ $

10,000,000 1,553,584 11,553,584

$ $ $ $ $

10,000,000 2,771,734 12,771,734

$ $ $ $ $

10,000,000 4,011,489 14,011,489

$ $ $ $ $

10,000,000 5,273,383 15,273,383

Total Liability & Equity

$

10,406,230

$

11,674,645

$

12,965,013

$

14,277,861

$

15,613,723

GRASS ROOTS BUSINESS PLAN | 36

B R E A K - E V E N A N A LYS I S BREAK-EVEN ANALYSIS Revenues Fixed Costs EBIT BE % Break-Even

Year 1 Year 2 Year 3 Year 4 Year 5 Average $ 1,440,000 $ 2,923,200 $ 2,967,048 $ 3,011,554 $ 3,056,727 $ 2,679,706 $ 1,094,360 $ 1,446,860 $ 1,464,360 $ 1,481,860 $ 1,499,360 $ 1,397,360 $ 345,640 $ 1,476,340 $ 1,502,688 $ 1,529,694 $ 1,557,367 $ 1,282,346 76.0% 49.5% 49.4% 49.2% 49.1% 54.6% $1,094,360

$1,446,860

$1,464,360

$1,481,860

$1,499,360

$1,397,360

BREAK-EVEN ANALYSIS Revenues

$4,000,000

Break-Even

$3,000,000 $2,000,000 $1,000,000 $-

Year 1

Year 2

Year 3

Year 4

Year 5

GRASS ROOTS BUSINESS PLAN | 39

N E T P R E S E N T VA LU E & I N T E R N A L R AT E O F R E T U R N

Investment Cashflow

Low Mid High

$10,000,000 -$10,000,000 Present Value Present Value Present Value

Year 1

Year 2

Year 3

Year 4

Year 5

$406,230 $369,300 $376,139 $383,236

$1,674,645 $1,384,004 $1,435,738 $1,490,428

$2,965,013 $2,227,658 $2,353,723 $2,489,482

$4,277,861 $2,921,837 $3,144,356 $3,388,467

$5,613,723 $3,485,680 $3,820,606 $4,194,900

NET PRESENT VALUE Discount Rate NPV

Cannabis Low Mid 10% 8% $388,480 $1,130,562

IRR & MIRR Financing Rate Reinvestment Rate

IRR MIRR

5% 4% 11.13% 9.34%

High 6% $1,946,514

GRASS ROOTS BUSINESS PLAN | 40

BIBLIOG R APH Y

GRASS ROOTS BUSINESS PLAN | 41

BIBLIOGRAPHY Cain, P. “Cannabis taxes brought in $186 million in five and a half months” Jun. 19, 2019. Global News. Retrieved from: https://globalnews.ca/news/5403579/cannabis-taxes-brought-in-186-million-in-five-and-a-half-months/ Canadian Press. “Aphria buys Broken Coast Cannabis in $230 million stock and cash deal.” Jan. 15, 2018. Financial Post. Retrieved from: https://business.financialpost.com/commodities/agriculture/aphriabuying-broken-coast-cannabis-for-230-million-in-stock-and-cash Canadian Press. “Aurora Cannabis buying Whistler Medical Marijuana in deal worth up to $175 million.” Jan. 14, 2019. Financial Post. Retrieved from: https://business.financialpost.com/cannabis/auroracannabis-buying-whistler-medical-marijuana-in-deal-worth-up-to-175m Efron, S. “Craft cannabis growers say better bud will be key to thriving in the legal market.” Jun. 22, 2018. The Globe & Mail. Retrieved from: https://www.theglobeandmail.com/business/smallbusiness/growth/article-craft-cannabis-growers-say-better-bud-will-be-key-to-thriving-inthe/ George-Cosh, D. “Canadians spending $5.9B on pot, mostly from black market.” Mar. 01, 2019. Bloomberg. Retrieved from: https://www.bnnbloomberg.ca/canadians-spending-5-9b-on-pot-mostly-from-black-market-statscan-1.1222284 Jordan, H. “Health Canada Falls Behind on Licensing Micro Cultivators” Jul. 16, 2019. Leafly. Retrieved from: https://www.leafly.ca/news/industry/canadas-micro-cultivators Kane, L. “Small pot growers find roadblocks on path to microcultivation licences” Dec. 13, 2018. Global News. Retrieved from: https://globalnews.ca/news/4744966/small-cannabis-growers-microcultivation-licences/ Lamers, M. “Canadian cannabis extracts industry set to ‘explode this fall’” Apr. 10, 2019. Marijuana Business Daily. Retrieved from: https://mjbizdaily.com/canadian-extracts-industry-50-cannabis-market/ Mazur, A. “Canada’s cannabis supply issues are real, despite feds’ denial, says business professor” Jul. 05, 2019. Global News. Retrieved from: https://globalnews.ca/news/5463653/canadas-cannabis-supply-feds-denial/

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BIBLIOGRAPHY North Cowichan. Zoning Bylaw 1997. No. 2950 (Consolidation.) Sep. 18, 2019. Retrieved from: https://www.northcowichan.ca/assets/Municipal~Hall/Bylaws/Zoning%20Bylaw.pdf Obando, S. “Industrial Sector Remains ‘Red Hot’ Despite Headwinds” Apr. 08, 2019. National Real Estate Investor. Retrieved from: https://www.nreionline.com/industrial/industrial-sector-remains-red-hot-despite-headwinds Shore, R. “Freeing craft cannabis from 'grey market' worth $3 billion to B.C: report” Jun. 26, 2019. Vancouver Sun. Retrieved from: https://vancouversun.com/cannabis/cannabis-business/cannabis-small-business/freeing-craft-cannabis-from-grey-market-worth-3-billion-tob-c-report Smart, A. “Cannabis co-ops seek to bring small producers, processors into legal market” Feb. 10, 2019. CBC. Retrieved from: https://www.cbc.ca/news/canada/british-columbia/cannabis-co-ops-seek-to-bring-small-producers-processors-into-legal-market-1.5013649 Statistics Canada. “At a glance: Government revenues from the sale of cannabis, March 2019” June 2019. Government of Canada. Retrieved from: https://www150.statcan.gc.ca/n1/daily-quotidien/190619/dq190619e-eng.htm Statistics Canada. “Cannabis market data” August 2019. Government of Canada. Retrieved from: https://www.canada.ca/en/healthcanada/services/drugs-medication/cannabis/research-data/market.html Statistics Canada. “National Cannabis Survey, second quarter 2019” August 2019. Government of Canada. Retrieved from: https://www150.statcan.gc.ca/n1/daily-quotidien/190815/dq190815a-eng.htm

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APPEND IX

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A P P E N D I X A : M U N I C I PA L I T Y O F N O R T H COWICHAN LETTER

GRASS ROOTS BUSINESS PLAN | 45

A P P E N D I X B : B C C R A F T S U P P LY AGREEMENTS Grass Roots’ exclusive deal with Pasha & BC Craft Supply provides the necessary tools to a tenant from A-Z in Canada's legal supply chain.

All tenants of the Grass Roots Business Centre will already have in place a consultancy agreement from Canada's number one consultancy firm, CCI, a supply agreement for all by-product, and an accompanying letter of intent to purchase all product out of the Grass Roots Business Centre:

BUSINESS PLAN 2019