AA: Today, we operate on four business pillars. RHO Phyto is our medical brand. These are really medical cannabis formulations that are designed using advanced drug delivery systems and are backed by evidence to provide the medical community with the toolkit, the number of different products that they can then prescribe for their patients. We have a medical platform which is really an online pharmacy and patient support program called MyMedi.ca. This is now commercial in Canada. This is providing tens of thousands of patients with complete access to medical cannabis, insurance coverage, patient support, and clinical education. Our pharmaceutical pipeline already has one indication-specific drug that's been approved and is now in the commercialization stage.

AA: Then we have our Aureus division, which is part of our supply chain that provides the active ingredients that go into the other business units. RHO Phyto is our non-indication-specific medical cannabis products. These are various drug delivery formats, all of which are non-inhalation. These are proprietary patent pending or patent-approved formulations that utilize cannabinoids to provide a targeted drug delivery, whether it's CBD, THC, or CBN, and we can provide these formulations to the medical community and patients in an accessible format. The medical community, predominantly physicians and nurse practitioners, then prescribes these products for specific patients and clinical indications.

AA: We believe RHO Phyto is the most advanced medical cannabis brand today in the world, given that it comes with again advanced drug delivery systems, but also, it's an evidence-based approach given that we're able to do such research here in Canada. These products are available across several medical cannabis channels in Canada and internationally, as well as retail channels through some provincial boards here in Canada, including Ontario, Alberta, and some of the other smaller provinces. A big part of our story was a recent acquisition of medical cannabis by Shoppers that we completed last year. For those of you who don't know, Shoppers Drug Mart is the largest pharmacy chain here in Canada. It's sort of equivalent to the Walgreens or CVS.

AA: They had a medical cannabis division that was very well established and built, and it was an established leader within the Canadian market, specifically working with the largest insurance providers. We've transitioned and taken over this division. We've successfully provided a continuation of care to the patients of this division. Now, this has been relabeled as MyMedi. MyMedi is working today with the largest private and public insurance providers and is providing complete medical cannabis care to patients, including a diverse portfolio of formulations and products from various companies, including Avicanna's own RHO Phyto, pharmacist-led bilingual patient support programs, and a number of different specialty care programs as I mentioned insurance but also veterans’ affairs.

AA: This has been a very successful incorporation of RHO Phyto and MyMedi to provide an even more complete medical cannabis platform. We believe as more and more markets internationally, specifically in the United States, legalize medical cannabis at a federal level, we'll be able to transition and move into the market by providing this complete package. Education and training are a big part of medical affairs and what we do at MyMedi. We have established a number of courses and assets for physicians to incorporate the medical community into the process. We strongly believe that a patient who can benefit from medical cannabis from a formulation or product perspective should be going through their physician. From a pharmaceutical perspective, we really focus on a number of different clinical indications.

AA: Major ones are neurology in terms of epilepsy and multiple sclerosis, but of course, areas such as anxiety, depression, PTSD, and specifically to our veteran population, pain management. And then we actually look at dermatology indications, specifically EB and eczema. We have a number of pharmaceutical candidates and/or approved products that are in various stages. I'll touch on Trunerox, which is our epilepsy drug, but we also have other formulations that have now gone through preclinical development, in some cases observational human studies. What's really amazing here is our ability to combine our medical cannabis platform with our pharmaceutical pipeline.

AA: We're really learning from our medical cannabis platform and from the revenues being generated from the studies that are being conducted, what are the top indications that could benefit from specific Avicanna formulations. Those winners are then selected and put into various clinical protocols that will go through the pharmaceutical development pathway, which will also include the FDA in our mid to long-term plans. Recently, we completed two very exciting studies. One was on a rare skin condition called epidermolysis bullosa in The Hospital for Sick Children here in Toronto. Also, we finished another study with a different topical candidate designed for MSK, and local inflammatory pain showed very good signals.

AA: These are just some examples of how our pharmaceutical pipeline is also going through early-stage clinical development. Our first drug is called Trunerox. INVIMA, Colombia's regulatory authority, approved Trunerox. This product will then go through commercialization in Colombia initially, and then we expect to be able to expand it into other South American and Central American markets. This is approved for catastrophic pediatric epilepsy cases, including Lennox-Gastaut syndrome and Dravet syndrome, and we believe that there's a vast market opportunity for this. Because we are producing this formulation using our own active pharmaceutical ingredients that are manufactured in Colombia, we believe that we can price Trunerox in an affordable, accessible format in these developing markets where affordability and accessibility are quite important.

AA: This actually marks our first indication-specific pharmaceutical, which we believe is going to provide significant opportunity but is not going to be the last one as we also expect to expand this into other markets and look to expand into the rest of our pipeline. Quickly, we produce our own CBD, CBG, and THC in our raw material division. We are working on other cannabinoids as well, but the purpose of this was really to ensure that in addition to having these pharmaceutical formulations for both medical and pharma purposes, we can actually control the supply chain. Often being categorized as a cannabis company has been a challenge for us, but also relying on cannabis companies for our active ingredients would have been problematic. Therefore, we've established one of the most sustainable cultivation projects in the world. We are already organic certified by the USDA.

AA: Over the last seven years, we've been able to produce industrial-scale CBD, CBG, and THC in terms of an active pharmaceutical format. We've been able to export that into 17 countries. So far, three pharmaceutical approvals have been obtained internationally. One of which is ours, which is using this API. Really, what would have been a supply chain business unit has now become its own profit center and a source of active pharmaceutical ingredients for us and our international pharmaceutical partners. We are very well positioned internationally. As I mentioned earlier, we're not addressing a cannabis opportunity. We're addressing a medical and pharmaceutical opportunity at a global level.

AA: The International Convention of Narcotics does allow medical and pharmaceutical products to be exported where it doesn't for recreational. We do look at the market as a global opportunity, and we're also looking to establish further in more markets, but as of now, we've completed transactions in about 20 countries, which is really just a foothold into getting into more countries but also expanding the market opportunity in those countries. I'll quickly go through the scientific platform just because I want to leave time for the conversation with Brad, but I believe we are scientific leaders in the industry. We control and own all of the intellectual property. Everything's been developed in-house, and a lot of it has been developed through grants from the Canadian government where we're conducting this research.

AA: We do work with the leaders we work with the top medical and academic institutions, we recently hosted a very successful symposium that we will be broadcasting with some of these thought leaders, and we really had the opportunity and the luxury to be able to work with these key opinion leaders in terms of establishing really the forefront of medical cannabis and pharmaceutical cannabinoid potential. From a financial perspective, 2023 was a big year for us. We had about 300% growth. We went from 4 million to about 17 million Canadian. We're on track to reach about 30 million or so from our current run rate in Canada. We're continuing to grow at this rapid rate. As I mentioned earlier, Q1 was a record revenue for us and our first EBITDA positive, which is really exciting because we're able to deliver what is a sustainable business from our medical cannabis side while we continue to develop our long-term pharmaceutical international business model.

AA: A major factor here to highlight is the fact that we're operating at about a 50% consolidated margin today at this early scale, which is a signal of the entry barriers and the proprietary nature of our products. It is a very exciting phase. We're on the TSX senior board. We did an IPO. We're on the junior exchange in terms of the OTCQX in the United States. We do ultimately plan to get out to more senior exchanges in the United States, and we believe that the US audience is the audience the right one for the type of biopharma company that Avicanna is today. I'll pause there. I'd love to get Brad on so we can have more of the fireside chat, but thanks for your time, everyone.

Brad Sorensen: Thank you. That was a lot, and we probably have much to discuss. Now I’m looking forward to it. I'm going to go way back to the beginning because you said that the US is a target market with great investors, and I agree. American investors would be very interested in this company, but there's also a big issue in America, which you also talked about, that legalized marijuana, medical marijuana, people conflate that with cannabis, and it just gets all mixed up. Why aren't you just a medical marijuana company that people would see on the corner? What's the difference between what you guys do and what they do? I know they're vast, but pick a few things to emphasize to investors that you're not the marijuana guy on the corner.

AA: Yeah. First of all, we're not in dispensaries. We're not in the United States because it's not federally legal in the United States. Obviously, we think that the market is attractive, and we intend to enter it ultimately, but we provide standardized pharmaceutical forms of cannabinoid-based products that are prescribed by physicians today and then delivered to patients. That's what we do. On the medical side, these are products that are not indication-specific. The physician has to make that judgment call in terms of what product is for what disease and how it's titrated. On the pharmaceutical side, for example, Trunerox is an approved drug by INVIMA, which is sort of the FDA of Colombia for Lennox-Gastaut syndrome. This means these products are produced under GMP, which means they're standardized and evidence-based in the prescription.

AA: When you buy a product from a dispensary, you're not getting the physician's support; you're getting a teenager or a budtender telling you what to do. We're strong advocates that medical and adult use should be separated. Somebody wants to buy joints from a dispensary for their weekend, by all means. But a mother should not have to walk into a dispensary to buy the products for their epileptic child. That's not the right format, the right delivery, and the right handholding. So that's the major difference. Because Canada is federally legal, some other markets we work in, such as Brazil, are federally legal for medical and pharma purposes. We operate in those markets. United States, it's not. I'm not going to be in a US dispensary when I'm applying for FDA-level drugs in the future. We have separated that. Unfortunately, we misconstrued and put into this pigeonhole of, oh, they're just a cannabis company. And that's certainly not the case. We're a pharmaceutical company that's using cannabinoids as active ingredients.

BS: Yes. Let's talk about that really quickly. In the US, the Biden administration rescheduled marijuana. Does that have any impact? What is your outlook for the United States? I'm sure you're involved with the legal wranglings here in the United States and how this market is developing. What do you foresee in the future? How is the environment now, et cetera?

AA: We're not as affected as you would imagine. I mean, because we're not a recreational company, we're not in dispensaries. I don't have banking issues. We don't have those limitations; we're just not in the US. We can enter the US with current legislation as long as I have an FDA-approved drug. We're currently generating the data and the clinical packages, and we're learning about our products so that we can apply them to the FDA, do FDA-level trials in the near future, and get a drug approved. If the legislation does not change, I can still enter the United States with an FDA-approved drug when I can meet those standards, and that's the long term if nothing changes. But with the rescheduling of cannabis, I think what has happened is that it's going to allow perhaps more opportunity for pharma companies, biotech funds, and investors to enter.

AA: I think we're a prime target for them to collaborate with because we've done the work. We actually have the intellectual property. We have proof of concept. We're serving thousands of patients internationally. If the legislation does allow medical cannabis, then we would look to enter with RHO Phyto, our medical brand, with MyMedi, our medical platform. Again, we're not a dispensary company. We're working with insurance companies and hospitals and physicians, that pharmacological package, the pharmacoeconomic packages for insurance providers, the pharmacovigilance involved with taking care of patients, and the patient support we've already established and are doing. I think we'll be very well-positioned to enter and work with medical companies that are looking to provide a proper standard of care to patients using medical cannabis.

BS: Have you found insurance companies receptive to this? A doctor is prescribing this and can be reimbursed for it. I know there has been a problem with that in the past. How is it in its current state?

AA: We kind of picked that up from Shoppers Drug Mart because they were working with the largest insurance providers. If I were a large insurance provider, I would understand why they chose Shoppers. We are working with about 12 provincial payers. WSIB is the Work Safety Board of Ontario. If you get injured and medical cannabis is suitable for you, we're the preferred vendor. We are working with large insurance providers, both public and private, already here in Canada. About 70%, I think, roughly of our revenue generated from MyMedi is actually insurance adjudicated, which is even better than reimbursed. Patients aren't actually paying out of pocket. We're billing the insurance providers. It's already happening. Trunerox approval in Colombia is covered by insurance.

AA: It's hard for people to differentiate between what we do and recreational companies, but I think that's a major differentiator. The majority of our revenue is covered by insurance because these are prescribed products. Are we seeing the medical community support? Absolutely. Since day one, we have had a very successful symposium here in Canada a couple of weeks ago. We had the top hospitals and top key opinion leaders of the country attending and presenting. We've been working very closely with them. We believe the medical community will continue to support you if you can generate the evidence they're asking for, if you can provide standardized products that they're asking for, and if they're looking for the Avicannas of the world that is separated from the recreational side. They don't want recreational companies with low-quality products for their patients without evidence.

BS: I definitely agree with that. On that, on the evidence side, as you described it, I see two different kinds of paths. There are the FDA and official approval paths, which require specific tests to go through. That's sometimes an onerous process, no doubt about that. What is the testing on the other side for the non-FDA products? What kind of testing do those products go through to prove their effectiveness to medical people and consumers?

AA: That's a good question. First of all, the FDA path requires clinical development, GMP manufacturing, and full clinical development packages. The exciting thing is that we can actually generate that evidence internationally and then come into the US and FDA when we're ready, and we're doing that already. We've conducted about 19 preclinical and clinical trials so far, so we're already doing that. Once you have substantial evidence, you know the US is obviously the most attractive market, so we will apply for it once we have the right packages. In terms of the medical cannabis side, in my opinion, you're still going to require some sort of GMP manufacturing. I would suggest having at least standardized products that at least have GMP manufacturing, but that's sort of the basics. In a market like Canada, you don't even need that. You don't need GMP manufacturing. You actually work under good production practices, GPP. Then it's the testing. Making sure that heavy metals, residual solvents, microbiology, and those types of basic standards of a product that should be going to a patient are covered. In Canada, we do have that.

AA: Internationally, in a market like Brazil, they have that, plus GMP. Europe, they have that, plus GMP. There are already more standards and quality that they would need to be able to adhere to, which we already do. I do believe ultimately that there are probably 100 or so clinical indications that benefit from pharmaceutical cannabinoids, but that's going to take a long time. In that interim period, I do believe that there's a medical cannabis opportunity as well.

BS: Hearing you talk, there are obviously differences between the countries. How difficult and expensive is it to navigate with the company between some of the tightest regulations and then the loosest? How do you manage that as a company?

AA: We set higher quality standards for cannabis for ourselves than most of these countries have today. Because we take a more serious approach to cannabinoid-based medicine, we take the highest level of standards. Formulations that are stable, formulations that are designed to have an actual specific delivery target release profile. For example, slow release for sleep, fast release for neuropathic pain, transdermal if you're trying to get a topical to the joints and muscles, and local if you're trying to hit a dermatology indication. We believe the standards we've taken are pharmaceutical standards.

AA: While medical cannabis legislation and standards continue to evolve, we think that we're already above that in many countries. So that's why we've sort of become established leaders within that realm. Otherwise, it's quite difficult, as every country has very different regulations. We also have a very strong legal and regulatory department that continues to navigate that. We've been able to export it to 20 countries. It tells you something about us, our understanding of how to navigate within these regulatory environments.

BS: I agree with that. I think you mentioned it at the beginning, but I want to reiterate it. Do you control a supply chain, the manufacturing, and the kind of things that help promote the product's quality?

AA: Yeah. We control the two most important components of the value chain. One is the intellectual property. So, the formulations, the drug delivery systems, the clinical efficacy, the data, and the education training come with that. That is all Avicanna owned. Then we own a very important part of the value chain: the upstream, which is the raw materials. Because this industry is new, the manufacturing of the CBD, THC, and CBG that goes into these drugs is something that we control and produce ourselves. We don't have to rely on recreational cannabis companies that you're buying these input materials from. By controlling those two components, at the beginning and the end, we have a very good understanding of how to navigate these markets. Based on the product and the geographic location, we then outsource manufacturing to contract manufacturers, allowing us to internationalize and scale without having to do major CapEx of our own manufacturing.

BS: Yep, it definitely makes sense. I want to get into the financials, and actually, this leads to client questions, so this will work out well. I guess part of the client's question is that you mentioned that you have a positive EBITDA. The question is, is that a one-off, and how lumpy is revenue going to be?

AA: I don't believe it's going to be a one-off. I think if you look at the revenue over the last two or three quarters since our acquisition of Shoppers Drug Marts Medical Cannabis Division, it's been consistently within this sort of six million dollars and up range. What we're demonstrating is some consistency and growth. What we're also demonstrating is raising efficiency. We were able to raise margins, increase margins, and lower costs. We've spent the first nine months or so optimizing this business unit in Canada and look forward to growing it.

AA: I don't believe it'll be lofty. I think it's going to be something that's going to continue to grow. But in addition to that, I think this is just a proof of concept stage. If we're generating a 25-30 million dollar run rate this year just based on Q1 revenues, that has been obviously publicized. We are already looking to sort of double from last year. This is the base in terms of what I think the company is capable of just through Canada. Because of the regulations, Canada was really our proof of concept market. We wanted to demonstrate things work; we wanted to demonstrate that we're helping patients and that we can get the medical community on board, and we have.

BS: Yeah. I love this question because it's one I like to ask CEOs. It kind of tells you where the company is. They ask, what have you most excited about the next year or so? And why is that? Is it a specific product or business development? What have you got up in the morning excited about what's to come over the next year looking forward to?

AA: I think that's a great question. I would say internationalization of what we've already accomplished in Canada. Expanding this, going into more advanced clinical development, potential co-development. I think these things are super exciting because we've had such good signals from both the anecdotal level in terms of patient success and our observational clinical trials. Going into these sorts of more advanced clinical trials, I think, will demonstrate the potential of this company from a pharmaceutical perspective. Regarding patents, such as intellectual property, we announced a major patent that was awarded by the US Patent Office yesterday. That stuff is super exciting. Then, there was the entrance of strategic partnerships.

AA: We're seeing major pharma, CPG, and wellness companies entering the space. They're looking around. Then, in many ways, they're collaborating with us. We've announced some of those partnerships in the early stages. They're not named yet. But I think as those pharma companies and those partnerships mature, the audience will see the real opportunity there. I'm very excited about big-picture pharma and the internationalization of what we've already accomplished.

BS: I think looking at your company and listening to you, and I think you described it earlier as an inflection point to where the proof of concept has been done. Now, it's ramping up and moving into other markets, and moving into that phase which is a great phase to be in. We're almost out of time. We could talk about this for another hour and a half. I'm going to give you about 60 seconds here to leave investors with whatever thoughts you want.

AA: First of all, thanks for joining. Brad, thanks for participating in this. I think we're in this incredibly exciting period. I'm the founding CEO. I've been in this company for nine years. We've really built what is a real science-based, evidence-based cannabinoid product company that is going to now internationalize the successful proof of concept in Canada, as we've already mentioned. I do believe that we're well positioned to be leaders within the global market opportunity. I think now there's evidence and there's proof that there are many clinical indications that are benefiting from cannabinoid-based products, specifically epilepsy, sleep, and pain. Those are massive market opportunities.

AA: Someone needs to take it very seriously, and that's what we've done. Of course, we're in Canada because of the regulations, but we look at the US opportunity in terms of commercialization. However, we also look at the US opportunity in terms of capital markets. We believe that the company has earned the value it deserves from a share price perspective. We're starting to do more investor relations, getting out there, presenting. That's why I'm here today. But over the last couple of years, we've been head down, executing and demonstrating the proof of concept. Now it's really time to get out there, and both reap the benefits of what we've developed from a commercial perspective, tell the stories, and set the stage for ultimately getting onto a senior exchange in the United States.

BS: I think that's a great way to sum it up. I agree with all those looking at your company. I'm very excited about it. I wish I were covering it. But I want to thank all the investors who have tuned into this. Thank you for your time. If you have more questions, please feel free. There's an opportunity after the seminar to ask the company questions, and they will get back to you and schedule meetings if you want to. I can tell you they're great guys, and they are very happy to tell their story and explain what's going on and why it's so exciting. So again, thank you, everybody, for your time, and have a great day.

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