CEO Letter

Moments like this happen once in a lifetime.

By innovating today, HEXO Corp. is preparing for the future of adult-use cannabis. We are responsible, we are diligent, we are strategic. We are also bold. And that’s how we are securing long-term value for shareholders.

Dear Shareholders,

Five years ago, Adam Miron and I sat in a basement and envisioned a company. We were driven by a belief that cannabis could have measurably positive impacts for adults who use it responsibly. I had experience in finance and operations. Adam brought political acumen. Together, we would rally a team with the right blend of marketing, branding, quality, sales and product deployment expertise. We would create HEXO Corp.

At the beginning of this past year, we had grown our team to nearly 50 employees, had 45,000 sq. ft. of greenhouse space and were selling 24 different medical cannabis products under our Hydropothecary brand. Less than a year later, we have 270 employees and are on track to have 1.3 million sq. ft. of greenhouse space by year’s end. And, of course, we are entering a whole new world of legal adult-use cannabis.

I am proud to say that HEXO Corp. has the right combination of history, momentum and enthusiasm to enter the post-legalization world confidently and boldly. Indeed, we are among a small number of companies positioned to shape it.

Sébastien St-Louis

We are committed to sustainable operations and good governance that will secure long-term value for our communities, our employees and our shareholders.

Our Strategy

With your help, we have raised $316.5 million in public markets since July 2017. And with zero debt held, we are one of the best-capitalized companies in our industry as we begin selling adult-use cannabis in our home province of Quebec, as well as other Canadian markets.

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We aim to capitalize upon this favourable position as we execute our plan to grow into an international consumer packaged goods company. We will do so through our four strategic pillars.

Top Two in Canada

We became a licensed producer (“LP”) in March 2014, joining just over a dozen or so other LPs, and sold our first product just over a year later. Today, we have landmark supply agreements in place with five provincial governments, including a five-year contract with Quebec’s Société québécoise du cannabis (“SQDC”) that’s worth $1 billion or more in revenue. That represents 35% of the province’s adult-use sales in the first year of legalization. In total, we have provincial or private retail distribution agreements in most major markets in Canada. Studies have estimated the legal Canadian market will be $10 billion a year; we anticipate having a 12%–15% market share in 2019.


In the coming year, our top priority is to serve our home base through flawless execution of our SQDC agreement, while deliberately expanding our product offerings in other markets through our house of brands strategy.

Canada is ultimately a platform for bigger things. As a top licensed producer at home, we will position ourselves as an international player – ready for other adult-use markets to open up. We intend to secure 2% or more of what we expect will be a $250 billion global market.

Brand Leadership

We have served the medical market with award-winning products for over three years through our Hydropothecary brand. With our adult-use HEXO brand, and strategic house of brands approach, we will build upon our existing customer knowledge with data-driven analysis and activation outreach. By striving to understand adult-use consumers and their preferences better than our competitors, we will create a host of products geared toward specific value segments. Varying in concentration, price point and format, these new and exciting products will be category leaders.

With a range of offerings that consumers want – and that they can trust to deliver consistently great experiences – we will put our brand at the top of mind in every market we serve.

New Product Innovation

We are proud of our award-winning cannabis products, and the loyalty of our customers. At the same time, we know that cannabis products today do not necessarily look like those of tomorrow. Legalization and partnerships with leading consumer packaged goods (“CPG”) companies will drive research and innovation. By identifying, developing and launching new products, we will remain on the vanguard for years to come.

Operational Scalability

At the end of the day, creating new products, building brand leadership and positioning ourselves as a leading licensed producer all depend on our ability to scale operations and deliver on our promises. As our 2018 growth demonstrates, we are actively investing in people, processes and systems that ensure the highest-quality products at sustainable operating costs.

Operational scalability also ensures that we can honour the commitments we’ve made with provincial and private partners, and guarantees the uncompromised quality and safety of our products. As our recent facility expansion proves, our track record is best in class.

The Responsible Way Ahead

HEXO Corp. is helping shape an entirely new legal market. That’s an exciting opportunity, but also a humbling one. We have a responsibility to ensure that we help educate our customer, recognize the potential adverse effects of our products, mitigate our environmental footprint and give back to our community.

Whether it’s through carbon and greenhouse gas inventories of our facilities, working with Ottawa Riverkeeper to protect our local watershed or supporting the Campaign for Cannabis Amnesty to help those convicted of simple possession charges, we are committed to being a responsible corporate citizen.

We also know that true responsibility goes beyond photo-ops and oversized cheques. That’s why we are committed to sustainable operations and good governance that will secure long-term value for our community, our employees and our shareholders.

As we sat in that basement, Adam and I didn’t know what the future of cannabis had in store, but we envisioned a $1 billion company that could be part of that future. Having achieved that and more, today we share a vision with you to build a Fortune 500 CPG company – a true house of brands for cannabis.

Sébastien St-Louis, CEO
October 25, 2018

Our Story


Nearly 20 years ago, in 2001, Canada was at the forefront of change when it became the first country to legalize medical cannabis.

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In June 2013, Canada enacted the Marihuana for Medical Purposes Regulations (“MMPR”).

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HEXO Corp. enters the first year of legalization as a vertically integrated CPG company with momentum.

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Picture a day when two colleagues go for a business lunch and instead of ordering two glasses of wine they order a cannabis-infused beverage.

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Nearly 20 years ago, in 2001, Canada was at the forefront of change when it became the first country to legalize medical cannabis. Now, with its October 2018 legalization of adult-use recreational cannabis, Canada has undone a 95-year-old ban and once again taken a major step forward.

In fact, as provinces and territories allow adult-use sales from coast to coast, the country is staking a strong leadership claim in an emerging $250 billion global market. For those Canadian companies prepared to make a difference, this is a once-in-a-lifetime moment to shape an industry – not just at home but around the world.

A Historic Relationship

Humans have cultivated cannabis for nearly 5,000 years for a reason: the flowering plant’s molecular properties have tremendous social, health and wellness benefits when used responsibly. Indigenous to Central and South Asia, the plant and its many applications spread throughout the world – reaching the Middle East and Africa thousands of years ago and the Western Hemisphere by the mid-sixteenth century.

But colonial restriction efforts throughout Asia and Latin America, as well as efforts in the United States and Canada in the early 20th century, culminated in widespread prohibition and stigmatization of cannabis.

The Seeds of Change

Canada paved the way for medical cannabis and was joined by such countries as Portugal, Belgium, Chile, Brazil and the Czech Republic. Just as jurisdictions followed Canada’s lead on the medical front – allowing the use of cannabis to treat pain, nausea and other conditions – an increasing number are poised to similarly decriminalize adult use. Soon, consumers around the world will look for a whole host of products that deliver consistently great experiences. An they’ll turn to companies they can trust.

Change Makers

With legalization, first on a national then international scale, cannabis will emerge from the shadows as an amazingly adaptable consumer good. Like other consumer packaged goods – from coffee to alcohol, chocolate to potato chips, shampoo to cosmetics – it lends itself to just a handful of truly global players with expertise in production, distribution, sales and brand loyalty, and, importantly, market-defining innovation.

The global cannabis market will inevitably consolidate. But in the not-so-distant future, lists of $100 billion CPG businesses will include one or two companies that were able to fully capitalize on this historic moment. These will be household names, with concentrated brand value and name recognition on par with leaders in soft drinks and alcohol. There are only a handful of cannabis companies with a credible shot of making that list – and we believe HEXO Corp. is among them.

As a Canadian company with a first-mover advantage, we have methodically built a foundation to shape and define the cannabis market – particularly in the minds of consumers and investors.



In June 2013, Canada enacted the Marihuana for Medical Purposes Regulations (“MMPR”), which replaced earlier rules governing access and use of medical cannabis. What became known as HEXO Corp. was founded three months later, with the creation of The Hydropothecary Corporation in August 2013.

In the months and years that followed, we began harvesting plants, establishing lasting relationships with medical patients and building infrastructure unrivalled by any other licensed producer in Canada. Put another way, we began laying the groundwork to capitalize on the inevitable legalization of adult-use cannabis at home and around the world.

Scaling Up

With our culture of innovation, HEXO Corp. never stands still. Just over a year after our founding, we proved the viability of greenhouse cannabis cultivation with our original first-of-its-kind facility in Gatineau, Quebec. We soon needed much more than 7,000 sq. ft., and we got to work.

Today, HEXO Corp.’s licensed facilities total 310,000 sq. ft., with an annual production capacity of 25,000 kg of dried product. In addition to our 35,000 sq. ft. greenhouse completed in 2017 and one that totals 250,000 sq. ft. completed in mid-2018, our facilities include warehouse and distribution spaces, as well as laboratories to advance cultivation methods and develop products.

Of course, like the industry itself, our infrastructure is expanding quickly: we recently acquired space in Belleville, Ontario, and have plans to establish a sizable facility in Greece through our joint venture partnership with Qannabos. HEXO Corp. is also on track to open a 1 million sq. ft. greenhouse in December 2018. The size of 17 football fields, the new greenhouse will help increase our annual production capacity to 108,000 kg.

We have a demonstrated record of hitting targets. With our existing footprint and on-schedule expansion plans, we are ready for the first year of legalized cannabis – and to meet the needs of a growing market.

Meeting the Demand

Prudent infrastructure expansion, along with regulatory know-how and unmatched expertise, has positioned us to meet demand while exceeding expectations through our medical brand, Hydropothecary, and its diverse product line.

Backed by our reliable record, and proven capacity to deliver orders, HEXO Corp. enters the post-legalization world with industry-leading supply agreements. A landmark contract with the Société québécoise du cannabis (“SQDC”), in our home province, will supply Quebec with 200,000 kg or more of cannabis over five years. That accounts for a projected 35% of provincial sales in the first year of legalization – and represents $1 billion in potential revenues.

Other agreements with provincial bodies in Ontario, British Columbia and Saskatchewan, as well as with private retailer Fire & Flower, mean that HEXO Corp. has among the highest revenue visibility of any cannabis company in Canada or the world.

Distributing the Product

The ability to cultivate cannabis is essential, but so is the ability to distribute innovative products to retail partners and end-users. In 2018, we established a 58,000 sq. ft. distribution and storage centre in Montreal, which the veteran logistics services provider Metro Supply Chain Inc. will operate on our behalf.

The partnership is just one way HEXO Corp. is ensuring flawless delivery – for end-users and investors alike.



Having built a solid foundation – and with infrastructure and distribution channels in place ahead of schedule – HEXO Corp. enters the first year of legalization as a vertically integrated CPG company with momentum.

We have already sold over 1 million grams of cannabis to thousands of Canadian patients who look to us for consistently safe, high-quality products. With each sale, we deliver just that – while building brand value and awareness.

A Name You Can Trust

At HEXO Corp., we are more than a cannabinoid compound provider. We are a strategic market leader with a solid history of technology, innovation and branding – and the trust of our customers. That makes us an attractive partner in the post-legalization world.

Cannabis-based products will take many forms in the coming years, including vapes, edibles and other delivery methods we have yet to imagine. But consider infused non-alcoholic beverages. We went out to the marketplace and spoke to leading beverage players looking to tap into smokeless cannabis. We looked for a prospective partner with a skill set and industry knowledge that would complement our own. We found such a partner in Molson Canada.

Through Truss – the joint venture we announced with Molson Canada in August 2018 – we are at the forefront of the cannabis-infused beverage market. The partnership combines Molson Canada’s storied industry experience and distribution expertise with HEXO Corp.’s proprietary emulsification and formulation technologies and history of product innovation. And for consumers, it will deliver products backed by brand names with built-in trust.

A Eurozone Foothold

As we position ourselves for post-legalization in Canada, we are also laying the groundwork for adult-use markets elsewhere. Through our joint venture with Qannabos, for example, we will establish a 350,000 sq. ft. licensed facility in Greece, which will increase our production capacity and enable us to serve legal markets in the United Kingdom, France and other jurisdictions.

By selling high-quality HEXO products in Europe today, we can build brand recognition and loyalty that will translate to our success in adult-use markets tomorrow.

Partnerships That Will Shape an Industry

HEXO Corp. enjoys an enviable position – we are one of just two licensed producers to have partnered with a Fortune 500 company, and we are actively exploring additional vertical relationships in food, cosmetics and other product areas. We are reaching out to trusted CPG brands and learning how we can complement their cannabis strategies in ways that drive shared value.

Because we can offer licensed infrastructure, innovative extraction technologies, exciting products, access to legal adult-use markets and first-mover advantage – all of it right out of the gate – we’re demonstrating the true power of HEXO.



Picture a day when two colleagues go for a business lunch and instead of ordering two glasses of wine they order a cannabis-infused beverage. They’ll enjoy a quick-onset, quick-offset experience. And because the formulation will be just right, they’ll return to work without feeling groggy.

Or imagine a day when an amateur athlete turns to a cannabis-based product to treat inflammation instead of ibuprofen. She’ll be back on the court or running the trail without the side effects.

This is the face of adult-use cannabis.

More to Come

Through provincial and private retail agreements – and by making strategic investments in our people – we are actively leveraging our capacity to scale production and distribution. Whether through online or brick-and-mortar sales, millions of Canadian consumers can enjoy premium HEXO-branded products right from the start of legalization.

At the start, we’re able to offer those consumers dried product, sublingual sprays, intimate oils and decarboxylated powders. But we are constantly researching new ways of consumption, different ways to unlock the benefits of cannabis. In future, we will offer soft-gel capsules, topicals, anti-inflammatories and other products we haven’t imagined yet.

Guided by market research and good corporate governance, we’ll develop quality products and offer them throughout Canada, and in legal adult-use markets around the world.

A Valuable House of Brands

When discerning consumers scan the shelves (or menus) for a wide range of cannabis products – from beverages to cosmetics, from edibles to vapes – they will look for brand names they know. They will look for brand names they trust. They will look for HEXO.

By building a leading house of brands, one that offers a range of price points and formulations, we are establishing a strong market share and positioning HEXO Corp. as a top earnings per share company.

Powering a Rare Opportunity

Whether it’s in our greenhouses and research facilities, in our face-to-face interactions with pharmacists and retail sales associates or through our joint ventures with Fortune 500 companies, HEXO Corp. employees have the enthusiasm, vision and discipline to shape an entirely new market from scratch.

At HEXO Corp., we are powering a rare opportunity for our partners, our customers and our investors.