Progress Report: 3.18.22

Grasshopper Family,

We are up to 14 stores! And one of those is going to be a grand opening in the next couple weeks! And we have another grand opening evaluating us as well!

This update is going to be a little bit on the longer side...for very good reason.

Building a brand is hard. Sales is hard. Adam goes out there each day, sharing the Grasshopper Farms story in the midst of the chaos in the market - the people engaged in the race to the bottom that will surely leave those in the race battered and bruised. BUT, amidst all of the provisioning centers are experienced retail professionals who truly understand the race to the bottom isn't healthy. Retailers who are structured for a long-term journey, not a short sprint.

These are our partners.

Some of you have asked about the financial health of our company and the progress of our sales. You know me for transparency...and that isn't changing.

We borrowed a lot of money. We spent a lot of money. We have made a little bit of money. This is what it is to be a startup. We have a budget for 2022 and are very clear on how much revenue we need to generate each month to meet our financial obligations. There are some things we can do at the farm to bolster our position in the MI market, but they will be contingent on the timing of sales. For example, more indoor drying space will allow us to have a higher dry flower yield and more flexibility on our wholesale pricing as early as this December. But, that will depend on the sales of our 2021 harvest.

Our sales arc is on track. We are a new brand. People love our story. But, they also need to evaluate our product. This takes time. We are not only secured in 14 stores (at the time of this email) but we also have reorders now coming in. This is a very good sign. We also needed time to get our first harvest packaged. That is still going on and is likely to keep going on for another 45 work days. Last week we tested how quickly we can package product and learned a lot. We are prepared.

I believe two events are going to boost sales at a time when we are ready for it.

The first will be a contest we are announcing in the next few days. This is the Grasshopper Farms Green Ticket contest. Just think of Willy Wonka and the Golden Tickets in the chocolate bars. Instead, consumers will head to participating retailers to purchase 1/8 of an ounce and see if they found a Green Ticket. The Green Ticket will give them cannabis for 20 years, access to any event where GHF is participating, and VIP access to the farm. In addition to purchasing at retailers, people can also nominate someone to receive a ticket. And, one ticket will be awarded at the Reggae On The River. The contest will start on 4/20 and run about five weeks, with award winners announced each Friday!

Reggae On The River is the second market event. This is an event that should have between 5,000 and 7,000 people! There will be 300 VIPs. We are the ONLY cultivator at the event and we are the ONLY vendor who is providing the VIPs with a Flight of Flower - which will be one gram of 5 different strains. Our packaging. Our info cards. Our people. Ky-Mani Marley and his band tried our flower and loved it.

The market is also going to start shifting in the next six weeks. It usually occurs sometime in March or April. This year it is now looking like it will be in April or May. This is due to the additional supply of mid and low grade flower and the recall. But, let's look at this even more critically. This is the first year in three years when vacation travel is viable. People are dying to get back out there. And, they are ready to do it in a way that does not require them to just go to some remote cabin and stay away from people. Michigan (and other vacation states) are due for a great summer. We are already seeing it with Spring Break. Even the locals are excited about getting back out. And all of this is going to happen just as the oversupply starts to dwindle. That should force the prices back up and position our premium flower quite nicely.

Lastly, we have not found another premium outdoor flower. We are also having a hard time finding flower with our terpene percentages. In fact, we haven't found any. I'm not saying it doesn't exist. But, we have not found it. And we are looking!

People are catching on. We just have to be patient.

So, what we focus on is super important.

Adam and Kayla have been crushing sales discussions. It's hard. And they hear no or not yet a lot. Normal. I start and end every day with these two so we can talk about our daily objectives and debrief on what we learned. Sales is HARD. And I commend both of them for their daily efforts.

Building 2 at the farm is cranking on quality control and packaging. As I mentioned, the team has been testing the process to see what throughput we can achieve when we really need to crank. Quality control of product also means quality control of the building and all spaces. Cleanliness is very important.

Building 1 is growing! Literally. The mother plants are now occupying two rooms! The team has also been cleaning the heck out of the building. Grow Room 1 (that was used for a ton of harvest activities) almost looks new again! The team is doing an incredible job of keeping our equipment clean and serviceable. Check out the biosafe mats we use to ensure shoes are sanitized before going into any of the rooms. We also have a quarantine space for new genetics we are bringing on site and testing this year!

I hope you see something really special in these pictures. One, the team is pumped and happy! Two, the spaces are clean and highly organized.

Back to our financial health and business viability. Very few people embark on a startup. Even fewer make it to where we are. And even less have a plan that will take them to the next phase. If this were easy...then everyone would be doing it. This takes planning. This takes discipline. This takes patience. This takes a team. This takes a family. The first phase is the first of the two hardest parts - getting a startup off the ground. The second gate that most people don't have the stomach for or knowhow to navigate is exactly where we are now - early sales. Seriously. The stress alone crushes most people. These two steps are the strongest barriers to entry in any startup world, and certainly this one.

Once upon a time I did this challenge called the Death Race. Most people give up. Many do not make mandatory cutoffs. This is our business Death Race. We will not give up. We will endure. We will make our cutoffs.

Once upon a time someone told me the best joke that you can tell God is your plan. :) I took this to mean we get very attached to specific concepts and plans. So attached that we aren't able to embrace change. We welcome change. We are ready for change. We will change.

We already have exciting content queued up for this upcoming week. But...that will have to wait for next Friday.

Until then, please enjoy an amazing weekend!