Higher Ground. Insights from Canada s Most Comprehensive Consumer Cannabis Study. Pat A. Pellegrini, Ph.D. President and CEO Vividata

Higher Ground Insights from Canada s Most Comprehensive Consumer Cannabis Study Pat A. Pellegrini, Ph.D. President and CEO Vividata pat@vividata.ca

National Headlines Shopify plots online cannabis-sales domination after Canada's debut BNN Bloomberg Molson Coors readying cannabisinfused beverages to sell next year Financial Post Medical cannabis users anxious over supply shortages CBC It's crazy! : Quebec's ban on sales of anything with words or images of pot riles business owners CBC What Canada s doctors are concerned about with marijuana legalization The Globe and Mail Canadian entrepreneurs cooking up edible pot products despite legalization delay The Globe and Mail

Entrepreneur sells do-it-yourself cannabis edible kits to bypass legal limitations StarMetro

Who We Are: 40,000+ Canadians Surveyed Annually 40+ Urban Canadian Markets 60,000+ Variables 500+ Consumer Products and Brands 300+ Media Brands for All Media 170+ Psychographics

Methodology Surveyed nearly 5,000 Canadians aged 19+ from March 2-14, 2018 Projected to Canada s 19+ population by age, gender, province and major cities

Social Acceptability of Consumption 7% 5% 6% 41% Alcohol 41% 14% 24% Tobacco 26% 10% 25% 24% 18% Cannabis 16% 25% 17% Completely acceptable Somewhat acceptable Undecided Somewhat unacceptable Completely unacceptable Source: Vividata s Canadian Cannabis Study 2018. 6

Social Acceptability of Consumption 24% 24% 14% 39% Acceptance 24% 18% 43% Acceptance 26% 26% Tobacco 10% 10% 25% 16% Cannabis 17% 25% Completely acceptable Somewhat acceptable Undecided Somewhat unacceptable Completely unacceptable Source: Vividata s Canadian Cannabis Study 2018. 7

Support and Opposition Across Canada Support Undecided Oppose 34% 26% 31% 30% 14% 11% 12% 15% 52% 64% 57% 56% 49% 15% 36% 25% 13% 62% National British Columbia Prairies Ontario Quebec Atlantic Source: Vividata s Canadian Cannabis Study 2018. Support = Fully support or Somewhat support Oppose = Fully oppose or Somewhat oppose 8

Current and Potential Consumers 21% Current Consumers Not Likely to Consume 64% 15% Potential Consumers Post Legalisation Source: Vividata s Canadian Cannabis Study 2018. 9

Strong Sub-regional Variation Active Cannabis Consumers (Share of Household Population 19+)

Current and Potential Consumers by Age Current Consumers Potential Consumers 14% 10% 29% 20% 27% 30% 21% 24% 8% 16% 19-24 25-34 35-49 50-64 65+ Source: Vividata s Canadian Cannabis Study 2018. 11

Current and Potential Consumers by Age Current Consumers Potential Consumers 14% 10% 29% 20% 27% 30% 21% 24% 8% 16% 19-24 25-34 35-49 50-64 65+ Source: Vividata s Canadian Cannabis Study 2018. 12

Method of Consumption Current Consumers Most Often Used Method 11% 12% Potential Consumers Preferred Method Post Legalisation 27% 20% 57% 55% 7% 11% Smoking a Joint Pipe/Bong Vaping Edibles Source: Vividata s Canadian Cannabis Study 2018. 13

Cannabis retailers marketing edibles online despite legal hurdles.

How Cannabis Was Obtained by Consumers Pre-Legalisation 68% 18% 13% 12% 9% 9% 8% 7% Friend Private Dispensary Doctor's Prescription Family Online Shared Government Licensed Dispensary Homegrown Friend Private Dispensary Doctor's Prescription Family Online Shared Gov t Licensed Dispensary Homegrown Source: Vividata s Canadian Cannabis Study 2018. 16

Preferred Channel Post Legalisation 10% 15% 18% 24% 23% 20% 12% 13% 4% 10% 11% 4% 5% Current Consumers Potential Consumers* 11% 9% 8% Pharmacies Government run dispensaries Non-government/private dispensaries Government owned liquor retailers Grocery/supermarket Family/Friend Homegrown Online Pharmacy Gov t Run Dispensary Private Dispensary Gov t Owned Liquor Retailers Grocery/ Supermarket Family/ Friend Homegrown Online Source: Vividata s Canadian Cannabis Study 2018. *Preferred Channel percentages for Potential Consumers were calculated from the sum of duplicated responses. 17

Preferred Channel Post Legalisation 10% 15% 18% 24% 23% 20% 12% 13% 4% 10% 11% 4% 5% Current Consumers Potential Consumers* 11% 9% 8% Pharmacies Government run dispensaries Non-government/private dispensaries Government owned liquor retailers Grocery/supermarket Family/Friend Homegrown Online Pharmacy Gov t Run Dispensary Private Dispensary Gov t Owned Liquor Retailers Grocery/ Supermarket Family/ Friend Homegrown Online Source: Vividata s Canadian Cannabis Study 2018. *Preferred Channel percentages for Potential Consumers were calculated from the sum of duplicated responses. 18

Estimated Market Size and Potential Low Mid High Current Consumers: $2.5B $3.7B $4.7B Potential Consumers: $1.8B $2.7B $3.3B $4.3B $6.4B $8.0B Market Potential Post Legalisation: Source: Vividata s Canadian Cannabis Study 2018. 19

Demand for legalized cannabis draws lineups & heavy web traffic across Canada CTV

CEO of CannTrust apologises for delivery and supply issues.

Modernists 37% of Adult Population Support legalization Non-users are more likely to use with legalization Prefer to purchase from an established company See benefits in recreational & medicinal use Support the need for firm regulation to avoid excessive use Source: Vividata s Canadian Cannabis Study 2018.

Utilitarians 33% of Adult Population Support legalization Support cannabis as a form of medical treatment See utility in Cannabis use People will make their own choice on whether to consume or not without outside influence Legalisation won t encourage excessive use Source: Vividata s Canadian Cannabis Study 2018.

Cynics 29% of Adult Population Oppose legalization Want more government research needed Gateway drug Under age consumption Advertising will influence non-users to try cannabis Source: Vividata s Canadian Cannabis Study 2018.

Opinions on Cannabis as a Gateway Drug Cannabis is a gateway drug that leads users to other more harmful drugs. More Likely to Agree Index: 200 Average Canadian More Likely to Disagree 100 0 Source: Vividata s Canadian Cannabis Study 2018. 25

Opinions on Cannabis Consumption I m concerned people will consume cannabis in excess due to legalization. More Likely to Agree Index: 200 Average Canadian More Likely to Disagree 100 0 Source: Vividata s Canadian Cannabis Study 2018. 26

Opinions on Packaging Cannabis packaging needs to specify effects on behaviour. More Likely to Agree Index: 200 Average Canadian More Likely to Disagree 100 0 Source: Vividata s Canadian Cannabis Study 2018. 27

Example of Proposed Packaging & Labeling Requirements

Packaging Will Not Be a Point of Differentiation

Opinions on Advertising Media advertising will influence non-consumers to try cannabis. More Likely to Agree Index: 200 Average Canadian More Likely to Disagree 100 0 Source: Vividata s Canadian Cannabis Study 2018. 30

Tragically Hip

Who Should Be Educating on Effects of Cannabis 78% 80% 77% 71% 77% 82% 61% Modernists Utilitarians Cynics 62% 55% 51% 50% 46% 49% 51% 47% 48% 48% 44% 39% 44% 45% Government Doctors/Health Care School Cannabis Retailers Dispensaries Media Professionals Companies that Cultivate Cannabis Source: Vividata s Canadian Cannabis Study 2018. 36

Key Media Channels for Public Education 76% 74% 80% 72% 69% 72% Modernists Utilitarians Cynics 54% 51% 55% 54% 49% 49% 46% 46% 57% 44% 41% 47% 38% 38% 39% 32% 34% 33% 30% 26% 25% Television Social Media Online Ads Radio Newspapers Outdoor Ads (ex. Billboards) YouTube Magazines Word of Mouth Source: Vividata s Canadian Cannabis Study 2018. 37

Motivation to Consume Among Current & Potential Consumers Relax Have fun Reduce stress Health/Medical Improve the mood Make activities interesting Increase creativity Help connect with others Heighten the senses Help concentration Meditate Improve sex life 11% 11% 10% 8% 8% 7% 16% 26% 47% 43% 32% Current Users Potential Users 54% Source: Vividata s Canadian Cannabis Study 2018. 38

Motivation to Consume Among Current & Potential Consumers Relax Have fun Reduce stress Health/Medical Improve the mood Make activities interesting Increase creativity Help connect with others Heighten the senses Help concentration Meditate Improve sex life 6% 11% 8% 11% 6% 10% 8% 8% 7% 8% 9% 7% 10% 18% 16% 26% 29% 47% 43% 48% 32% 44% Current Users Potential Users 54% 52% Source: Vividata s Canadian Cannabis Study 2018. 39

Motivation to Consume Among Current & Potential Consumers Relax Have fun Reduce stress Reduce Stress Health/Medical* Improve the mood Make activities interesting Health/Medical Increase creativity Help connect with others Heighten the senses Help concentration Meditate Improve sex life 6% 11% 8% 11% 6% 10% 8% 8% 7% 8% 9% 7% 10% 18% 16% 26% 29% 32% 32% 43% 48% 44% 47% 43% 48% 44% Current Users Potential Users 54% 52% Source: Vividata s Canadian Cannabis Study 2018. 40

Why Canadians Consume Cannabis 18% Both 7% 1 in 3 Canadian adults have consumed cannabis at some point. Recreational Only 75% Medical Only Source: Vividata s Canadian Cannabis Study 2018. 41

Recency of Use Amongst Users RECREATIONAL USERS 20% MEDICINAL USERS 18% 55% 10% 8% 6% 7% 10% 15% 49% Yesterday Past week Past month Past 3 months Past 6 months or longer Source: Vividata s Canadian Cannabis Study 2018. 42

Effects of Cannabis on Other Medication Significantly reduced amount Significantly reduced amount of other medication used of other medication used 35% Somewhat reduced amount of other medication used Somewhat reduced amount of other medication used No effect on other medication used No effect on other medication used 25% 28% Somewhat increased amount of other medication used Somewhat increased amount of other medication used Do not use other medication(s) Do not use other medication(s) 2% 9% Source: Vividata s Canadian Cannabis Study 2018. 44

Effects of Cannabis on Other Medication Significantly reduced amount Significantly reduced amount of other medication used of other medication used Somewhat reduced amount of other medication used Somewhat reduced amount of other medication used No effect on other medication used No effect on other medication used 25% 28% 35% 63% Somewhat increased amount of other medication used Somewhat increased amount of other medication used Do not use other medication(s) Do not use other medication(s) 2% 9% Source: Vividata s Canadian Cannabis Study 2018. 45

Cannabis as an Alternative 2.5M Canadian adults suffer from Canadian adults 1.2M 3.7M suffer from depression. migraines. Canadian adults suffer from arthritis. Source: Vividata s Fused Spring 2018 Study

Cannabis Use Among Those Suffering Depression 19% RECREATIONAL USERS 6% 3% MEDICAL USERS 58% BOTH 2.5M Canadian adults suffer from depression. NON USERS Source: Vividata s Fused Spring 2018 Study. 16% POTENTIAL USERS

Cannabis Use Among Those Suffering Migraines 20% RECREATIONAL USERS 4% MEDICAL USERS 55% 6% BOTH 1.2M Canadian adults suffer from migraines. NON USERS Source: Vividata s Fused Spring 2018 Study. 18% POTENTIAL USERS

Cannabis Use Among Those Suffering Arthritis 57% 17% 4% 6% RECREATIONAL USERS MEDICAL USERS BOTH 3.7M Canadian adults suffer from arthritis. NON USERS Source: Vividata s Fused Spring 2018 Study. 17% POTENTIAL USERS

2 in 5 Potential Users of cannabis used pain relievers for headaches in the past 6 months. Source: Vividata s Fused Spring 2018 Study. 50

1 in 4 Potential Users of cannabis used pain relievers for muscle or body in the past 6 months. Source: Vividata s Fused Spring 2018 Study. 51

1 in 5 women aged 35-49 who suffer from insomnia are Potential Users of cannabis. Source: Vividata s Fused Spring 2018 Study. 52

Next Steps: More Detailed Measurement of Health & Medical Use

Next Steps: More Detailed Measurement of Recreational Use

Questions? Pat Pellegrini, Ph.D. President & CEO Vividata pat@vividata.ca www. vividata.ca @VividataCanada company/vividata