C21 Investments Inc. (CXXI: CSE Buy Recommendation)

March 23rd, 2019

Report Disclaimer

The following report was conducted by the administrator of Kaspar Equity Research. The opinions, conclusions and recommendations contained within this report are those of the author himself.

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Certain information set forth in this report contains “forward-looking information”, including “future oriented financial information” and “financial outlook”, under applicable securities laws (collectively referred to herein as forward-looking statements). Except for statements of historical fact, information contained herein constitutes forward-looking statements and includes, but is not limited to, the (i) projected financial performance of the Company; (ii) completion of, and the use of proceeds from, the sale of the shares being offered hereunder; (iii) the expected development of the Company’s business, projects and joint ventures; (iv) execution of the Company’s vision and growth strategy, including with respect to future M&A activity and global growth; (v) sources and availability of third-party financing for the Company’s projects; (vi) completion of the Company’s projects that are currently underway, in development or otherwise under consideration; (vi) renewal of the Company’s current customer, supplier and other material agreements; and (vii) future liquidity, working capital, and capital requirements. Forward-looking statements are provided to allow potential investors the opportunity to understand management’s beliefs and opinions in respect of the future so that they may use such beliefs and opinions as one factor in evaluating an investment.

These statements do not guarantee future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or result expressed or implied by such forward-looking statements.

Although forward-looking statements contained in this presentation are based upon what management of the Company believes are reasonable assumptions, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

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Table of Contents

OVERVIEW ...... 3 THE COMPANY ...... 4 MANAGEMENT ...... 4 Robert Cheney ...... 4 Michael Kidd ...... 4 Randy Torcom ...... 4 ACQUISITIONS ...... 5 Completed Acquisitions ...... 5 Acquisitions Pursuant to signed definitive agreement ...... 8 FINANCIAL POSITION ...... 9 ACCESS TO CAPITAL ...... 10 RELATIVE VALUATION...... 10 Comparable Companies ...... 11 U.S. CANNABIS INDUSTRY ...... 11 FEDERAL AND STATE REGULATORY ENVIRONMENT ...... 11 MARKET CHARACTERISTICS ...... 13 Demand...... 13 Supply ...... 13 TECHNICAL ANALYSIS ...... 15 CONCLUSION ...... 16 PRICE TARGET ...... 17 BIBLIOGRAPHY ...... 23 APPENDICES ...... 26 APPENDIX A (MARKET CAP.-TO-SALES VALUATION) ...... 26 APPENDIX B (MAP OF STATE LEGISLATION) ...... 26 APPENDIX C (AMERICAN MARIJUANA CENSUS) ...... 27 APPENDIX D (33-MONTH PRICE ACTION)...... 27 APPENDIX E (TECHNICAL ANALYSIS INDICATORS)...... 28 APPENDIX F (RELATIVE ESTIMATED PRICE TARGET) ...... 28

Figure 1: Cannabis Superstore, Silver State Relief in Sparks, NV. Photo courtesy of C21 Investments Inc.

Buy Recommendation Target Price: $4.69-6.57 To be updated as the company releases 2019 revenues. Overview C21 Investments Inc. (C21) is a vertically integrated cannabis corporation based out of Vancouver, British Columbia, who processes, manufactures, and distributes cannabis within the United States. Previously operating as a natural resource exploration and development company under the name, Curlew Lake Resources Ltd., on November 24th, 2017, the company changed its name to C21 Investments Inc. As a part of this transition, Curlew Lake Resources’ issued and outstanding shares were consolidated on a 10:1 basis, bringing the company’s post consolidation common share count to 1,979,695.1 On June 18th, 2018, the company officially changed its business into the cannabis industry and began trading on the Canadian Stock Exchange (CSE) under the ticker CXXI.2At the time of writing this report, the company had a fully diluted share count of110.34 million and was trading at a price of $1.95. This report will assess the investment quality of C21 Investments Inc. by following a bottom up approach. First, the company’s management team will be examined, followed by an analysis of recent acquisitions and the company’s financial position. Then, the U.S. Marijuana Industry will be analyzed, subsequently leading into a brief commentary on the company’s price action. Where the report will conclude with a price target estimation based on the report’s conclusions. All dollar values within the report are in Canadian dollars unless otherwise stated. For disclosure purposes, the author was

3 not a shareholder of C21 Investments Inc. at the time of writing this report and did not receive any compensation from the company. The Company C21 Investments Inc. is building a vertically integrated cannabis company through a series of acquisitions. The company is targeting to purchase 100% interests in licensed, operating, revenue producing businesses with strong management teams in place covering cultivation, processing, production, and retail operations.

Management Robert Cheney Robert Cheney is CEO, President and Director of C21 Investments Inc. He is an entrepreneur and investor with a background in media, film, internet technology and telecommunications.3Mr. Cheney is a graduate from the Simon Fraser University where he received a BA in 1979 and obtained a law degree from the University of British Columbia in 1982.4He previously practiced corporate law with qualifications in British Columbia, the United Kingdom and Hong Kong.5Undoubtedly, his experience as a corporate securities lawyer is advantageous to Mr. Cheney’s success in building the company through acquisitions. As of August 27th, 2018, Mr. Cheney held 2,570,000 common shares and 125,000 stock options with a strike price of CAD$0.65 and an expiration date of October 15th, 2020.6Since the company listed, he has stated that he has yet to sell a single share - which is positive to see the CEO place his own confidence behind the firm.7In promoting the company, Robert has also done an excellent job as he has attended the Cannabis Capital Convention and partaken in multiple interviews with media outlets while the company is still at an early stage. With any new company, financial diligence is key as to not dilute current shareholders of their stake in the company. It is clear that Mr. Cheney understands this, as he mentioned in a recent interview that he is disciplined on costs and will continue to be disciplined in future capital raises, as he wants to preserve his capitalization table.8

Michael Kidd Michael Kidd is the CFO of C21 Investments Inc. and is a chartered accountant with executive experience in an array of industries and lifecycle stages. This includes time as a COO and CFO for a mid-size distributor, and more than 15 years of experience in the Forest Industry as a controller, where he eventually progressed to the executive level.9 Mr. Kidd’s previous experience with a distribution company should carry over into the intricate operations of a vertically integrated cannabis company which is beneficial.

Randy Torcom Randy Torcom is the Vice-President of Marketing for C21 Investments Inc. Randy is responsible for C21 products worldwide and international brand strategy. Mr. Torcom has previous experience as Vice-President of Brand Marketing at Burton Snowboards, where he drove competitive market positioning across multiple channels. Not limited to this, Torcom oversaw the visual retail strategy, ensuring a premium customer experience across all brick and mortar locations.10 Considering how important marketing is at the point of sale within the cannabis industry, this involvement with an internationally renowned brand is valuable.11

4 Acquisitions To date, the company has completed four acquisitions with an additional acquisition pursuant to a signed definitive agreement.12These business deals are discussed below.

Completed Acquisitions Eco Firma Farms - Oregon USA On June 13th, 2018, C21 Investments Inc. announced the completed acquisition of Eco Firma Farms LLC, which owns and operates a cannabis production facility and related assets, located in Oregon.13 The Eco Firma Farm’s operation operates an indoor cultivation facility totaling 23,000 square feet on a 20-acre site.

Silver State Relief - Nevada USA On January 16th, 2019, C21 Investments Inc. announced the completed acquisition of Silver State Cultivation Relief, LLC and Silver State Cultivation, LLC. Silver State’s businesses are an established and profitable, vertically integrated cannabis cultivation, processing and retailing operation. The company has a 155,000 square foot cultivation and processing facility and an 8,000 square foot retail dispensary, located in Sparks, Nevada. The retail dispensary is a “cannabis superstore” that serves over 36,000 customers per month. Along with this acquisition, C21 Investments will also acquire on closing a second 6,000 square foot retail dispensary located in Fernley, Nevada. This additional dispensary went into production in January of this year. The Silver State operation has a trailing twelve-month (TTM) revenue stream of USD$25 million.14It must be highlighted that this (TTM) figure does not include any trailing revenue from the Fernley dispensary.

Figure 2: Sonny Newman, largest shareholder of C21, at Silver State Relief Dispensary. Photo courtesy of C21 Investments Inc.

5 It is also worth acknowledging that after the acquisition of Silver State Relief, the owner of Silver State, Sonny Newman, became the largest shareholder of C21 Investments Inc. As of December 12th, 2018, his shareholding totals 22% of the issued and outstanding shares in the company.15 Seeing as the Silver State acquisition was structured in this way, it is positive that Mr. Newman is now taking share in the operational risk and upside potential of C21 Investments Inc.

Figure 3: Product offerings and Bud Bar display at Silver State Relief Dispensary. Photo courtesy of C21 Investments Inc.

Figure 4: Indoor Cultivation at Silver State Relief in Sparks, NV. Photo courtesy of C21 Investments Inc.

Pure Green - Oregon USA On January 25th, 2019, C21 Investments Inc. announced the completed acquisition of Pure Green Dispensary in Portland, Oregon. Pure Green has a 3,000 square foot retail dispensary and is a local retailer for both medical and recreational cannabis products.16

Phantom Farms- Oregon USA On February 4th, 2019, C21 Investments Inc. announced the completed acquisition of Phantom Venture Group LLC and Phantom Brands, LLC of Oregon (Phantom Farms). Phantom Farms has outdoor cultivation facilities totaling 80,000 square feet with an additional 40,000 square feet under development in Southern Oregon. Phantom Farms also operates a 5,600 square foot facility which includes a wholesale distribution warehouse, an extraction laboratory, and a 7,700 square foot state-of-the-art indoor grow facility in Central Oregon.17As with Sonny Newman of Silver State Relief, Robert Cheney has stated that his partner in Phantom Farms, Sky Pinnick, is also one of C21 Investments Inc.’s largest shareholders. Again, indicating that these target acquisition firms are partaking in the risk of C21’s operations, which is potentially beneficial for the overall success of the company.18

Figure 5: Phantom Farm’s Outdoor Cultivation. Photo courtesy of C21 Investments Inc.

Figure 6: Phantom Farm’s Indoor Cultivation. Photo courtesy of C21 Investments Inc.

Figure 7: Phantom Farm’s award-winning bud. Photo courtesy of C21 Investments Inc.

Acquisitions Pursuant to signed definitive agreement Swell Companies Ltd. - Oregon USA On November 2nd, 2018, C21 Investments Inc. entered into a definitive purchase agreement with Swell Companies Ltd. – replacing the previously announced signed letter of intent dated July 9th, 2018.19 Operating since 2015, Swell has been recognized as a leader in the extraction and manufacturing of THC and CBD derived products.20The company has a 10,000 square foot facility in Portland, Oregon and has expansion rights for an additional 18,000 square feet,

8 adjacent to the primary facility. The company also operates a 5000 square foot distribution warehouse.21

Figure 8: Swell’s marijuana extract in the manufacturing process. Photo courtesy of C21 Investments Inc.

Figure 9: Swell’s premium brand - Dab Society - Vape Pen. Photo courtesy of C21 Investments Inc. Financial Position Due to C21 Investments Inc.’s recent acquisitions and the company’s fiscal year-end falling on January 31st, 2019.A more up-to-date financial analysis will be completed in the following quarters when more representative data is available. However, the company’s access to capital and relative valuation will be examined.

Access to Capital For any new company growing through acquisitions, it is crucial to obtain sufficient capital to take advantage of growth opportunities.C21 Investments Inc. has had previous success with raising capital, shown by their previous upsizing and successful closing of a private placement deal in Canada for CAD$14,888,000.22 But the current regulatory environment has made it difficult for cannabis companies to gain access to capital in the United States. In a recent interview with Mr. Cheney, he stated that the landscape is changing rapidly and that federally regulated institutions are beginning to look seriously at the space. He believes someone will front-run the market like the Bank of Montreal had in Canada, but this has yet to happen. Nevertheless, C21 Investments Inc. is exploring debt facility opportunities in the near future as the company now has significant cash producing assets.23The company’s tight capitalization table should similarly be highlighted, showing that raising equity could too be a viable option for future cash needs. However, Mr. Cheney said the company is focused on debt opportunities, but will entertain equity opportunities if they make strategic sense.24

Relative Valuation In examining the relative value of C21 Investment Inc., the company’s most recent quarterly sales results represented on an annual basis and estimated post-acquisition projected (TTM) sales for the 2019 fiscal year have been examined in relation to competitor companies. These comparable competitors include: 1933 Industries Inc., Planet 13 Holdings Inc., MJardin Group Inc., Trulieve Cannabis Corp., MedMen Enterprises Inc. and Green Thumb Industries. Each competitors’ operations are discussed later in this section.

It must be understood that for the basis of this analysis, each comparable company had their last quarterly sales results converted to an annualized basis, whereas, the post-acquisition results for C21 Investments Inc. has been taken from comments made by CEO, Robert Cheney, in a recent interview with Midas Letter.25 Part of this spreadsheet analysis has been placed within the report below and can be found in appendix A.

When looking at appendix A, it is possible to recognize that pre-acquisitions, C21 was trading at a premium to competitors with a market capitalization-to-sales ratio of 137.06. It must be understood that the sales figure used in this calculation was for the three months ended October 31st, 2018, represented on an annual basis. Post acquisitions, C21 Investments Inc. now have the most attractive market capitalization-to-sales ratio of 4.30, while competitors have a median ratio of 10.35, potentially indicating that C21 is undervalued.

10 Comparable Companies 1933 Industries Inc. (CSE:TGIF) 1933 Industries Inc. is a vertically integrated cannabis company that operates in the medical and recreational cannabis sectors in Nevada, Colorado and California.26 Additionally, the company owns a specialized cannabis advisory firm supporting clients in security, intelligence and due diligence.27 The company is looking to continue expansion through acquisition within the United States and Canada.

Planet 13 Holdings Inc. (CSE:PLTH) Planet 13 holdings Inc. is a vertically integrated cannabis company active in the cultivation, production and distribution of both medical and recreational cannabis in the state of Nevada. The company has two cultivation licenses and two dispensary licenses – one for medical and one for recreational cannabis. Both dispensary licenses operate out of the same retail location.28

MJardin Group Inc. (CSE:MJAR) MJardin Group Inc. provides operational solution services for licensed cannabis cultivators, processors and dispensaries located in the United States and Canada. Their services include: licensure support, facility design, systems implementation, equipment leasing, facility ramp-up, and day-to-day personnel management and oversight.29

Trulieve Cannabis Corp. (CSE:TRUL) Trulieve Cannabis Corp. is a vertically integrated medical cannabis company with cultivation, processing, and distribution activities. The company operates primarily in Florida but is expanding its operations into California and Massachusetts. It has been reported that Truelieve Cannabis Corp. holds approximately 65% of the Florida cannabis market, with a patient base that has been growing approximately 10% month to month.30

MedMen Enterprises Inc. (CSE:MMEN) MedMen Enterprises Inc. is a vertically integrated cannabis company focused on the cultivation, production and retail aspects of the cannabis supply chain. The company has cultivation operations in Nevada, Florida, New York, and Arizona with plans to expand manufacturing in California. In addition, the company currently owns and/or operates retail stores in California, Nevada, Arizona and New York and plans to expand into the State of Massachusetts.31

Green Thumb Industries (CSE:GTII) Green Thumb Industries is a vertically integrated national cannabis cultivator, processor and dispensary operator.32 The company has 11 manufacturing facilities and 71 retail locations,33 operating in Nevada, Illinois, Maryland, Pennsylvania, Massachusetts. Florida, Ohio and New York.34 U.S. Cannabis Industry Federal and State Regulatory Environment Under U.S. Federal Regulation, the Controlled Substance Act (CSA) outlines that marijuana has no medical benefit and a range of activities including cultivation and the personal use of cannabis is prohibited.35 However, many states do not conform to Federal Law, as 32states have

11 now passed some form of legislation allowing for the use of marijuana for medical or recreational purposes.36It should be understood that although the issuer’s activities are in compliance with applicable U.S. State laws, strict compliance to these laws may not absolve the issuer of liability or prosecution under U.S. Federal law.37 With these federal implications, it is difficult to predict how the Department of Justice, Federal Bureau of Investigation and other government agencies will handle cannabis matters in the future.38Mention should also be made to the banking system as it is still difficult for banks to accept business from cannabis companies since these proceeds are still viewed as illicit to the fed’s.39 C21 Investments Inc. has indicated that for their Oregon operations, Credit Union banks are being used for all of their banking needs.40

Appendix B, which is shown below, showcases the 32 states that have passed some form of legislation for the use of cannabis:41

It is predicted that the ban on cannabis in the United States will soon come to an end as an increasing number of Americans think that the use of the substance should be legal. A 2018 study shows that approximately 66% of the American population advocated the end of prohibition (appendix C).42 This could perhaps influence the U.S. Federal Government to pursue legislation changes, however, these alterations will take time to enact. In a recent interview, C21 Investments Inc. CEO, Robert Cheney, announced that he believes that the regulatory headwinds have abated and, in his opinion, actually become a tailwind. Furthermore, he stated that the regulatory impediments are lessening by the month and that it is evident that people want

12 cannabis and the Government wants tax revenue.43Seeing as Roberts comments are supported by American’s receptive nature of the substance and the undisputable tax revenues for the Government - it could be expected that the U.S. will amend federal law in favor of the industry sometime in the future.

Market Characteristics Demand In 2017, the U.S. legal cannabis market was estimated at USD$8.3 billion and is expected to grow at a CAGR of 13.7%, to reach more than USD$23 billion by 2025.44 Breaking down revenue projections by jurisdiction, it is expected that by 2020,the States of California, Washington, Colorado, Massachusetts, Oregon, Florida, Michigan, Arizona, Nevada and Illinois will be the largest markets. However, it is expected that by this time, California, Washington, and Colorado are expected to reach sales in billions of USD$3.097, USD$2.278, and USD$1.833, respectively.45 Here it is possible to recognize that these three states combined revenue from legal proceeds are projected to produce similar revenue figures to that of the entire legal and illegal Canadian marijuana market for the 2019 fiscal year. The Canadian Market is expected to reach $USD5.39 billion for the 2019 fiscal year, assuming a USD/CAD exchange rate of $0.75.46

Supply The potential for economic profits has attracted numerous competitors to the U.S. cannabis market. Due to variations between state legislation, a few jurisdictions supply chains will be assessed, which include: California, Colorado, Oregon, Washington, Nevada and New Mexico.

California Before California legalized marijuana for recreational purposes, state regulator’s specified that they planned to avoid shortages of cannabis by ensuring sufficient licenses were provided to farmers, testers and retail distributors.47 However, during the summer of 2018, with the market still at an early stage, it was evident that the state was still struggling with cannabis shortages. Hezekiah Allen, executive director of the California Growers Association proclaimed that “There are way too few retailers in the state. The regulated market has actually contracted, while, at the same time, regulated supply has expanded.”48 These supply chain struggles do not stop here, as there are still limited labs to test the substance before selling it. In March of 2018, it was reported that the Bureau of Cannabis Control had only issued 26 temporary licenses for labs.49 Over time, these bottlenecks will be reduced as the industry matures, but still in February 2019, it was reported that Californian cannabis could cost up to six times more than legal products in Colorado’s more mature market.50 With a full year track record showcasing market forces, California’s cannabis industry is being choked by over-regulation, city’s banning cannabis shops and ultimately limited cannabis shop licenses currently issued.51 The LA Times reported that less than 20% of cities in California allow retail shops to sell cannabis for recreational purposes. Additionally, due to multiple state and city taxes on marijuana, these higher costs are still pushing consumers and cultivators to remain in the black market.52 In October of 2018, it was reported that the wholesale price of cannabis was USD$2.40 per gram.53

13 Colorado In Colorado, a slightly different environment exists. In August of 2018, it was indicated that the State was quite successful in balancing supply and demand. This is because since the beginning, Colorado had emplaced stricter regulation compared to other jurisdictions.54 Colorado capped the limits on cultivation licenses and the state was overall quite accurate in forecasting the market.55 However, Adam Bierman, CEO of MedMen said in an interview that Colorado is actually an unattractive market due to being heavily saturated and having more of a free market environment.56In March of 2018, it was reported that before tax, the price of recreational cannabis to the consumer in the state was slightly under USD$6.00 per gram.57The price of wholesale cannabis has followed a steep trajectory which has placed increasing pressure on smaller and less-efficient growers struggling to remain competitive among falling margins. In October of 2018, it was reported that the wholesale price of cannabis was USD$1.90 per gram.58

Oregon Oregon is said to be one of the most problematic states, which is due to the state’s relaxed cannabis laws and regulations. In 2016, regulators within Oregon projected that it would provide between 800-1200 business licenses. But as of April 2018, the commission had issued 1,824 business licenses – with approximately 981 for production and another 967 production licenses in various stages of approval.59 It was reported that In the Portland area, cannabis was selling for USD$4.00 per gram to consumers.60 In response to such oversupply and diversion to the illicit market, in May of 2018 Oregon regulators announced a moratorium on issuing new licenses, with the aim of preserving existing operators.61 In October of 2018, it was reported that the wholesale price of cannabis was USD$1.40 per gram.62

Washington Like that of Oregon, Washington State’s cannabis market has also experienced issues with oversupply. Cultivators have proclaimed that the state has grown too much cannabis and that there aren’t enough dispensaries to sell the substance, thus forcing farmers to sell their supply for pennies on the dollar.63It is clear that Washington does have a supply glut, but in early 2018, the Washington State Liquor and Cannabis Board requested public comment on rule changes to cannabis production size.64To date, no legislation alterations have been made. But on January 24th, 2019, one of the state’s top regulators made mention that they will consider allowing small cannabis farmers to sell directly to consumers to help these businesses remain competitive.65Without any changes, a bloodbath of prices remains, with Steve Fuhr, who owns Toucan Farmers stating that he is struggling to get more than USD$1.00 per gram wholesale.66 In October of 2018, it was reported that the wholesale price of cannabis had a weighted average of USD$1.32 per gram.67

Nevada In Nevada, recreational marijuana supplies are plentiful but not overly abundant, which have helped cannabis prices remain on the high side compared to other recreational markets.68Andrew Jolley, owner of The Source dispensary retail shop in Las Vegas said, supply is catching up, prices are dropping, but they aren’t expected to decrease rapidly as they have in other markets. He added that eventually he believes that there will actually be too much supply.69As of now, wholesale prices in Nevada remain attractive due to a decent balance between the number of

14 cultivators and dispensaries.70 In Q4 of 2018, it was reported that the wholesale price of cannabis was approximately USD$4.00 per gram – down 24% from Q4, 2017.71

New Mexico Currently, the State of New Mexico only allow cannabis for the use of medical purposes. The patient pool has been swelling with the total number of patients up 41.25% for the 2018 fiscal year.72Although regulators in the state capped growers to 450 plants, an expanding patient base has resulted in rising prices for consumers.73In response to these increased prices, on March 4th, 2019, regulators enacted an emergency rule that increased the medical marijuana plant limit to 2,500 per grower.74 It should be made known that this emergency enactment expires on August 28th, 2019, but regulators are working on are solution to provide adequate supply for current and future cannabis patients.75It was reported that the wholesale price of cannabis in New Mexico was USD$6.40 per gram.76 Technical Analysis In looking at C21 Investment Inc.’s technical analysis, appendix D, which showcases the company’s daily candle price action on a 33-month chart has been included in this section. This allows investors to gain a visual representation of the progress C21 Investments Inc. has made to date, and how the market has reacted to such events.

In looking at C21’s price action in relation to technical indicators, as shown below in appendix E, since December of 2018, the company’s stock price has appreciated approximately 150%.

15 Due to this considerable upside move, it is expected that the stock will consolidate in the near future, where it will begin to follow a more sustainable upward trend line. Referencing the chart below, it can be seen that a significant support is assumed to exist around $1.30. Although C21’s price is expected to consolidate, it is anticipated that price will not fall far below this line. Also supporting this suggestion is the 200-exponential moving average, which is currently around the same level and should similarly act as a significant area of support.

Conclusion In this conclusion, key points previously mentioned throughout the report will be paraphrased in describing why C21 Investments Inc. is potentially an attractive investment, while additionally highlighting areas of concern.

First, in covering management, it is apparent that, CEO, Robert Cheney is beneficial to the company due to his experience in corporate law, his short but encouraging track record in promoting the company, his commitment to share ownership and his diligence in company financing. Additionally, CFO, Michael Kid and Vice President of Marketing, Randy Torcom, bring previous experience that should support the company’s success.

In covering the company’s acquisitions, Eco Firma Farms has allowed the company to gain vertically integrated assets with positive revenue streams. Although it should be mentioned, Eco Firma Farm operates in Oregon, which is a market that has experienced one of the largest supply gluts compared to all legal jurisdictions in the United States. Nevertheless, the company’s vertical operations should preserve some margin protection against competitors. The company’s recent acquisition of Silver State Relief is advantageous to this investment thesis, as the company has now acquired substantial revenue producing assets in Nevada’s, young, but attractive

16 cannabis market. These assets, along with the acquisitions of Phantom Farms and Pure Green appear to position the company lucratively going forward.

Financially, the company’s recently acquired revenue streams, access to financing and attractive capitalization table enhance the company’s overall attractiveness due to their ability to finance future growth. Not limited to this, C21’srelative valuation in comparison to competitors is also a lucrative piece of this investment thesis as the analysis indicates that C21 is potentially undervalued based exclusively on the market capitalization-to-sales ratio.

The U.S. Federal Government’s current stance on the cannabis industry is undoubtedly a negative to this thesis. Although unlikely, it is possible thatC21 could be prosecuted for their operations going forward. However, it is a positive indication that American’s are becoming more receptive to the substance which could potentially mitigate this risk in the future. The size and growth of the U.S. cannabis industry are also positive features to investment in C21, as this market is expected to grow at a CAGR of 13.7% from 2017 to2025 and will engulf the Canadian marijuana market many times over. Price Target In coming to a price target for C21 Investments Inc., a relative valuation approach was used, based exclusively on the market capitalization-to-sales ratio. By utilizing the median market capitalization-to-sales ratio for competitors of 10.35, the market capitalization of C21was calculated to generate a relative price per share value. As shown below in appendix F,77 this valuation approach came to an estimated value of $4.69-6.57 per share.

1 C21 Investments Inc., “January 31st, 2017, Manager Discussion & Analysis,” released May 29th, 2017, (accessed February 10th, 2019). https://www.sedar.com

2 C21 Investments Inc., “News Release,” released November 23rd, 2017, (accessed February 10th, 2019). https://www.sedar.com

3 C21 Investments Inc., “About,”C21 Investments. https://cxxi.ca/about. (accessed February 10th, 2019).

4 Canadian Securities Exchange C21 Investments Inc.CSE Form 2A Listing Statement, June 14th, 2018, 27 https://webfiles.thecse.com/CSE_Form_2A_Listing_StatementJune_14-18_4836-9793-2133_- _CLEAN_FINAL_2.pdf?SdaE5fgjsvZYXD5GiU.7KuJWUefpXUBF=. (accessed February 10th, 2019).

5 Morningstar, “C21 Investments Inc. Key Executives – Robert Cheney,” Morningstar. http://insiders.morningstar.com/insiders/trading/executive- profile.action?PersonId=PS0000AUC1&flag=Executive&insider=Robert_Cheney&t=XCNQ:CXXI®ion=can&c ulture=en-US&cur=. (accessed February 14th, 2019).

6 C21 Investments Inc. “Information Circular,” August 30th, 2018, 4 (accessed February 14th, 2019). https://www.sedar.com

7 Robert Cheney, “C21 Investments Inc. Deep Value Play’s Potential for Top Line Revenue,” Interviewed by Benjamin Smith and Ed Milewski. Midas Letter Raw, February 15th, 2019, https://www.youtube.com/watch?v=OThWTYEfctY

8 Robert Cheney, “C21 Investments Inc. Deep Value Play’s Potential for Top Line Revenue,” Interviewed by Benjamin Smith and Ed Milewski. Midas Letter Raw, February 15th, 2019, https://www.youtube.com/watch?v=OThWTYEfctY

9 C21 Investments Inc., “About,”C21 Investments. https://cxxi.ca/about. (accessed February 10th, 2019).

10 C21 Investments Inc., “About,”C21 Investments. https://cxxi.ca/about. (accessed February 10th, 2019).

12 C21 Investments Inc, “October 31st, 2018, Manager Discussion & Analysis,” released December 28th, 2018, 2, (accessed February 16th, 2019). https://www.sedar.com

13 C21 Investments Inc, “October 31st, 2018, Manager Discussion &Analysis,” released December 28th, 2018, 2, (accessed February 16th, 2019). https://www.sedar.com

14C21 Investments Inc. "News Release," December 12th, 2018, accessed March 19th, 2019, https://www.sedar.com

15C21 Investments Inc., "News Release", December 12th, 2018, accessed February 28th, 2019, https://www.sedar.com

16 C21 Investments Inc., "News Release", January 25th, 2019, accessed February 16th, 2019, https://www.sedar.com

17 C21 Investments Inc., "News Release", February 4th, 2019, accessed February 17th, 2019, https://www.sedar.com

18Robert Cheney, “C21 Investments Inc. Deep Value Play’s Potential for Top Line Revenue,” Interviewed by Benjamin Smith and Ed Milewski. Midas Letter Raw, February 15th, 2019, https://www.youtube.com/watch?v=OThWTYEfctY

19 C21 Investments Inc., “January 31st, 2017, Manager Discussion & Analysis,” released Dec. 28th, 2018. (accessed February 10th, 2019). https://www.sedar.com

20 C21 Investments Inc., "News Release", November 2nd, 2018, accessed February 20th, 2019, https://www.sedar.com

21 C21 Investments Inc., "News Release", November 2nd, 2018, accessed February 20th, 2019, https://www.sedar.com

22C21 Investments Inc., "News Release", Jan 30th, 2019, accessed February 20th, 2019, https://www.sedar.com

23 Robert Cheney, “C21 Investments Inc. Deep Value Play’s Potential for Top Line Revenue,” Interviewed by Benjamin Smith and Ed Milewski. Midas Letter Raw, February 15th, 2019, https://www.youtube.com/watch?v=OThWTYEfctY

24 Robert Cheney, “C21 Investments Inc. Deep Value Play’s Potential for Top Line Revenue,” Interviewed by Benjamin Smith and Ed Milewski. Midas Letter Raw, February 15th, 2019, https://www.youtube.com/watch?v=OThWTYEfctY

25 Robert Cheney, “C21 Investments Inc. Deep Value Play’s Potential for Top Line Revenue,” Interviewed by Benjamin Smith and Ed Milewski. Midas Letter Raw, February 15th, 2019, https://www.youtube.com/watch?v=OThWTYEfctY

26 C21 Investments Inc, “October 31st, 2018, MD&A,” released December 28th, 2018, 2, (accessed February 16th, 2019). https://www.sedar.com

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76 Eli McVey, “Chart: Declines in wholesale prices hammer major recreational cannabis markets,” Marijuana Business Daily. October 29th, 2018, https://mjbizdaily.com/chart-declines-in-wholesale-prices-hammer-major- recreational-cannabis-markets/. (accessed March 4th, 2019).

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Kudialis, Chris. “Why Nevada’s pot prices are expected to drop.” Las Vegas Sun. September 14th, 2018.https://lasvegassun.com/news/2018/sep/14/we-charge-way-too-much-nevada-pot-prices-drop/. (Accessed March 15th, 2019).

Marijuana Policy Project. “State Policy.” MPP. https://www.mpp.org/states/. (Accessed February 20th, 2019).

McCaulou, Lily Raff. “Growing Pains: how Oregon wound up with more pot than it can smoke.” The Guardian. April 20th, 2018.https://www.theguardian.com/society/2018/apr/20/oregon-too-much-weed-oversupply- what-happened-420. (Accessed March 4th, 2019).

McGreevy, Patrick. “California is working to avoid a shortage of legalized marijuana; state pot czar says.” Los Angeles Times. July 19th, 2017.https://www.latimes.com/politics/essential/la-pol-ca-essential-politics- updates-california-is-working-to-avoid-shortage-1500492977-htmlstory.html. (Accessed March 2nd, 2019).

McGreevy, Patrick. “One year of legal pot sales and California doesn’t have the bustling industry it expected, heres why.” Los Angeles Times. December 27th, 2018.https://www.latimes.com/politics/la-pol-ca-marijuana-year- anniversary-review-20181227-story.html. (Accessed March 2nd, 2019).

McVey, Eli. “Chart: Declines in wholesale prices hammer major recreational cannabis markets.” Marijuana Business Daily. October 29th, 2018.https://mjbizdaily.com/chart-declines-in-wholesale-prices-hammer- major-recreational-cannabis-markets/. (Accessed March 4th, 2019).

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Pellejero, Sebastian. “Legalization Will Come Soon. Who Will Wear the Cannabis Crown?” Bloomberg. February 6th, 2019.https://www.bloomberg.com/news/articles/2019-02-06/legalization-may-come-soon-who-will- wear-the-cannabis-crown. (Accessed February 24th, 2019).

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Roberts, Chris. “Crash or Cash: What’s Happening to California Cannabis Prices?” Leafly. June 6th, 2018.https://www.leafly.ca/news/industry/crash-or-cash-whats-happening-to-california-cannabis-prices. (Accessed March 2nd, 2019).

Schaneman, Bart. “WA ponders allowing small marijuana growers to sell direct to consumers.” Marijuana Business Daily. January 24th, 2019.https://mjbizdaily.com/washington-state-may-allow-small-marijuana-growers-to- sell-direct-to-consumers/. (Accessed March 6th, 2019).

Schaneman, Bart. “Washington State cannabis oversupply spurs calls for change.” Marijuana Business Daily. January 10th, 2018.https://mjbizdaily.com/washington-state-cannabis-supply-hits-new-low-spurs-calls- change/. (Accessed March 6th, 2019).

Schroyer, John. “California testing labs expect marijuana ‘bottleneck’ in July.” Marijuana Business Daily. April 5th, 2018.https://mjbizdaily.com/california-testing-labs-expect-marijuana-bottleneck-july/. (Accessed March 2nd, 2019).

Sherman, Kyle. “Opinion: Marijuana road-trip discoveries: California cannabis is everywhere – and is expensive.” Market Watch. February 15th, 2019.https://www.marketwatch.com/story/3-surprising-things-i-learned- from-visiting-50-california-marijuana-dispensaries-2018-12-21. (Accessed March 4th, 2019).

Smith, Jeff. “New Mexico relaxes medical cannabis plant limits, so prices should ease.” Marijuana Business Daily. March 4th, 2019.https://mjbizdaily.com/new-mexico-relaxes-medical-marijuana-plant-limits/. (Accessed March 16th, 2019).

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Appendices Appendix A (Market Cap.-to-Sales Valuation)

Kaspar Equity Research, “CXXI Valuation Spreadsheet”, (March 23rd, 2019), https://www.kasparequityresearch.com/2018-reports

Appendix B (Map of State legislation)

Marijuana Policy Project., “State Policy,” MPP. https://www.mpp.org/states/.

Appendix C (American Marijuana Census)

Sebastian Pellejero, “Legalization Will Come Soon. Who Will Wear the Cannabis Crown?” Bloomberg. February 6th, 2019, https://www.bloomberg.com/news/articles/2019-02-06/legalization-may-come-soon-who-will-wear-the- cannabis-crown.

Appendix D (33-month Price Action)

Appendix E (Technical Analysis Indicators)

Appendix F (Relative Estimated Price Target)

Kaspar Equity Research. “CXXI Valuation Spreadsheet”, (March 23rd, 2019), https://www.kasparequityresearch.com/2018-reports