SLANG Worldwide : Management Discussion and Analysis

SLANG WORLDWIDE INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,

2021 AND 2020

DATED NOVEMBER 23, 2021

SLANG Worldwide Inc.

Management's Discussion and Analysis

The following Management's Discussion and Analysis ("MD&A") should be read in conjunction with SLANG Worldwide Inc.'s (the "Company", "SLANG", "we", "our") unaudited condensed interim consolidated financial statements and notes for the three and nine months ended September 30, 2021 and 2020 (the "Financial Statements"). This MD&A was prepared with reference to the MD&A disclosure requirements set out by National Instrument 51-102 - Continuous Disclosure Obligations ("NI 51-102"). The Financial Statements, together with this MD&A are intended to provide investors with a reasonable basis for assessing the financial performance of the Company as well as forward-looking statements relating to future performance. Results are reported in Canadian dollars, unless otherwise noted. The Financial Statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Information contained herein is presented as of November 23, 2021, unless otherwise indicated. The Financial Statements and related notes, and this MD&A, have been reviewed by the Company's Audit Committee and approved by the Company's Board of Directors on November 23, 2021.

Cautionary Note Regarding Forward-Looking Statements

This MD&A contains certain information that may constitute "forward-looking information" and "forward- looking statements" which are based upon the Company's current internal expectations, estimates, projections, assumptions and beliefs. Such statements can be identified by the use of forward-looking terminology such as "expect", "likely", "may", "will", "should", "intend", or "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may" or "will" happen, or by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets or other statements that are not statements of fact. The forward-looking statements included in this MD&A are made only as of the date of this MD&A. Forward-looking statements in this MD&A include, but are not limited to, statements with respect to:

• SLANG's business plan and growth strategy
• changes in laws, regulations and guidelines;
• the impact of COVID-19:
• outlooks regarding future financial position and cash flow; and
• SLANG's ability to compete.

Certain of the forward-looking statements and forward-looking information and other information contained herein concerning the cannabis industry and the general expectations of SLANG concerning the cannabis industry and concerning SLANG are based on estimates prepared by SLANG using data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which SLANG believes to be reasonable. While SLANG is not aware of any misstatement regarding any industry or government data presented herein, the cannabis industry involves risks and uncertainties that are subject to change based on various factors and SLANG has not independently verified such third-party information.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give 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's forward-looking statements are expressly qualified in their entirety by this cautionary statement. In

particular, but without limiting the foregoing, disclosure in this MD&A may make reference to or involve forward-looking statements. A number of factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements. See "Risk Factors" in this MD&A. The purpose of forward-looking statements is to provide the reader with a description of management's expectations, and such forward-looking statements may not be appropriate for any other purpose. Accordingly, readers should not place undue reliance on forward-looking statements contained in this MD&A. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.

Overview

This overview summarizes the MD&A, which includes the following sections:

1. Highlights - a summary of highlights from the Financial Statements and recent developments.
2. Our Business - a general description of our business and our areas of focus.
3. Objectives and Strategy - an overview of priorities and plans to achieve our objectives.
4. Key performance Indicators - a discussion of the metrics: Gross Merchandise Value, Branded Units and Branded Servings volumes.
5. Results and Outlook - an overview of our financial position and results; an analysis of our cash flows; and the outlook for the future.
6. Resources, Relationships and Risk - a discussion of all significant resources and relationships needed to deliver results and the risks that can affect achieving these results.

1. Highlights

During the 3-months ended September 30, 2021:

• The Company completed its acquisition of High Fidelity, Inc. ("HiFi"), Vermont's largest medical cannabis company, adding Vermont as a new Core Market. HiFi is vertically integrated which includes a 28,000-square-foot cultivation, production, lab, and retail distribution facility, with a planned 50,000-square-foot expansion expected to be completed in 2022. HiFi also holds two of the five medical cannabis licenses in Vermont with four operational dispensaries and the ability to add two new retail dispensaries upon receipt of licenses.
• Revenue for the third quarter 2021 was $10.1 million, compared with $7.9 million in the third quarter 2020 and $11.3 million in Q2 2021. The primary driver of year over year growth was the consolidation of wholesale revenue in Core Markets and the consolidation associated with the acquisition of HiFi. The decline compared to the second quarter 2021 was due to weaker than expected sales in the Company's Colorado Core Market operations and Emerging Market packaging and hardware sales.
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• Gross profit of $3.5 million (35% gross margin) in the third quarter 2021, compared with $4.0 million (50% gross margin) in the third quarter 2020. The decrease is mainly attributable to recognizing lower margin wholesale sales starting at the time of consolidation of our Colorado supply chain assets in Q4 2020. The comparative third quarter of 2020 reflects higher margin sales associated with packaging and hardware sales as well as licensing fees.
• EBITDA of ($5.9 million) in the third quarter 2021, compared to ($4.1 million) in the third quarter 2020. Adjusted EBITDA of ($2.0 million) in the third quarter 2021, compared with $0.06 million in the third quarter 2020. The increase of the Adjusted EBITDA loss is primarily attributable to a decrease in gross profit and an increase in operating expenses resulting from the acquisitions completed late 2020 and the acquisition of HiFi in Q3 2021.
• $3.5 million of cash and cash equivalents at September 30, 2021, compared to $6.5 million at December 31, 2020 and $9.7 million at June 30, 2021. September cash balance inclusive of $5.0 million in cash and transaction costs paid at closing of the HiFi acquisition.
• Subsequent to quarter end, the Company completed a term-loan financing with participation from Trulieve Cannabis Corp., a leading and top-performing cannabis company based in the United States, and two existing significant shareholders of the Company, Pura Vida Investments and Seventh Avenue Investments, for aggregate gross proceeds of $17.3 million U.S.
• SLANG's brands continued to earn market-leading positions in its Core Markets in the third quarter of 2021. Highlights include: O.pen ranked as the #1 vape cartridge in Colorado and #14 in Oregon; Firefly Mini was the #6 and O.pen was the #5 disposable vaporizer in Colorado; Bakked was the #6 dabbable distillate in Colorado; District Edibles was the #12 gummy in Colorado; and Lunchbox Alchemy was the #14 gummy in Oregon; Pressies was the #6 pill in Colorado (Source: BDSA.)

2. Our Business

SLANG is a leading global cannabis consumer packaged goods company with a robust portfolio of renowned brands. The Corporation currently owns, licenses, and/or markets 12 brands which serve the following categories: flower, inhalable concentrates, and ingestibles (including edibles and pressed pills). SLANG brings these products to market through "The SLANG Network".

The SLANG Network is a combination of licensed cannabis cultivators, manufacturers, distributors, retail, and e-commerce distribution platforms. The SLANG Network provides a capital efficient and scalable strategy through which SLANG drives brand value creation and expands its presence in both core (Colorado and Vermont) and emerging cannabis markets. Through the consolidation of The SLANG Network in 2020 and 2021, the Corporation's business model has considerably shifted and simplified in 2021.

The SLANG Network is comprised of a broad network of partners in addition to the Corporation's owned manufacturing, distribution and retail assets. The primary way that the Corporation's products reach the marketplace starts with SLANG, which manufactures and sells product formulation bases and packaging to its partners. The Corporation's partners then manufacture, package, and distribute final branded products to retail customers, and finally, they sell SLANG's products to consumers. Through the acquisition of HiFi in August 2021, SLANG now also sells directly to customers through its 4 retail locations in Vermont.

As of September 30, 2021, 99% of the Corporations business was directly derived from U.S. cannabis- related activities. As such, the Corporation's balance sheet and operating statement exposure to U.S. cannabis activities is 99%. While the Corporation's cannabis-related activities are legal pursuant to the laws

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of the states in which it operates, cannabis is illegal under U.S. federal law and the enforcement of relevant federal laws is a significant risk.

Areas of Focus

Cultivation

SLANG currently operates cultivation sites in Colorado and Vermont. The Colorado cultivation site was acquired through the Corporation's acquisition of Slang Colorado Cultivation Inc. ("SCC"), which was completed in December 2020. The Corporation expects to produce a portion of its raw material needs for distillate through the facility for the last quarter of 2021 and going forward. The cultivation site is located in Carbondale, Colorado and consists of four greenhouses and five acres of outdoor grow space.

The cultivation site in Vermont was acquired through the Corporation's recent acquisition of HiFi, which was completed in August 2021. HiFi is a vertically integrated cannabis company, which possesses 2 of Vermont's 5 existing medical marijuana licenses and operates four retail locations. HiFi currently has one cultivation facility located in Milton, Vermont with expansion plans underway for an additional cultivation facility to meet the expected demand of adult-use sales anticipated in late 2022.

Extraction/Manufacturing

At the cannabis extraction and manufacturing stage of The SLANG Network, SLANG has two types of business relationships:

1. Regulated extractors/manufacturers in which SLANG owns equity.
2. Regulated extractors/manufacturers in which SLANG will not own equity but licenses its brands to.

SLANG owns equity in the manufacturers in its Core Markets. Extractors/manufacturers which it will not own equity are its strategic partners in its Emerging Markets. SLANG supports these strategic partners to produce and wholesale/retail its branded goods by providing standard operating procedures and consulting on best manufacturing practices, sales, and go-to-market strategies.

Distribution

The most important aspect of distribution for SLANG is the relationship with the end retailer and consumer. To that end, the Corporation's inside sales activities, local brand ambassadorship, and retail relationship support activities, are key areas of focus and contributors to the success of The SLANG Network and the growth of Gross Merchandise Value and Branded Units' volume. As a result, SLANG has created one of the largest distribution footprints in cannabis today based on management's estimates, spanning over 2,500 points of retail distribution.

Retail

In August 2021, SLANG took its first step into the retail cannabis space by acquiring HiFi, which operates four retail locations in Burlington, South Burlington, Middlebury and Brattleboro, Vermont. This entry into Vermont will allow SLANG to expand its current brand offerings into a new Core Market, increasing Branded Units' volume, and recognize direct to consumer sales, increasing Gross Merchandise Value.

Marketing/Branding

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