Business Overview and Development

Maple Leaf (MGWFF) is incorporated in Alberta, Canada, with common shares listed on the TSX Venture Exchange (“TSXV”) under symbol MGW. The corporate office is located at 2916B 19 Street NE, Calgary, Alberta. In October 2012, Maple Leaf changed its name to Maple Leaf Green World Inc. from Maple Leaf Reforestation Inc.

Maple Leaf and its subsidiaries focus on the emerging cannabis industry in North America. The Company devotes its time, effort, and capital to seek medical cannabis business opportunities, including obtaining a license to produce and sell cannabis from Health Canada pursuant to the Access to Cannabis for Medical Purposes Regulations (“ACMPR”). Maple Leaf is also engaged in medical cannabis operations in the United States of America (“USA”), in the states of California and Nevada only.¹

Medical Cannabis

Canadian Medical Cannabis

Since mid-2014 the Company has been pursuing a license to produce and sell cannabis, as directed by Health Canada, and pursuant to the ACMPR. It has also been investing in assets to pursue cannabis-licensed cashflow generating opportunities, so that the Company is ready when it has obtained the license. This expanding industry is possible as a result of the Canadian government’s widely known decision to decriminalize and regulate production, distribution, and sale of cannabis and its ancillary medical and recreational products. The most recent manifestation of this process is the announcement that the Canadian government has legalized cannabinoid-infused foods and beverages, via recently included (November 28, 2017) edits to Bill C-45 (37-2) (third reading – House of Commons), which is available in full at www.parl.ca.

In April 2014, the Company entered into an agreement with Woodmere Nursery Ltd. (“Woodmere”), a private company of which a director and officer of the Company is a shareholder, to lease 80,000 square feet of greenhouse space located near Telkwa, British Columbia (“Telkwa”). Maple Leaf has since revised the arrangement with Woodmere to build its own facility on 30 acres of land. The Company will pay a yearly $240,000 land lease fee adjusted for inflation, with an option to purchase the land after one year.

In July 2014, the Company submitted an application to Health Canada for a license pursuant to the Marihuana for Medical Purposes Regulation (“MMPR”). The MMPR and the previous licensing process was later replaced by the ACMPR, on August 24, 2016. In January of 2017, the Company received notice from Health Canada that its application had progressed to the review stage 5 of the seven stage process established under the ACMPR.

In preparation for receiving the license to produce cannabis under the ACMPR, on May 24, 2017, the Company announced it engaged Paramount Structures Inc. (“Paramount”) as the procurement, engineering, and construction manager for its cannabis cultivation facilities at Telkwa and Nevada. In June 2017, Paramount commenced planning on the BC Facility when Maple Leaf made a deposit payment to Paramount of $1,102,500. Subsequent to September 30, 2017 (on October 24, 2017), the Company further announced a structural engineering firm, MMP Structural Engineering Ltd (“MMP”), is acting as the Company’s project manager for the facility in Telkwa. As of the date of this report, Woodmere has obtained a foundation building permit in connection with the Company's proposed cannabis cultivation facility in Telkwa.

In August 2017, the Company submitted an abridgement application (the “Abridgement Application”) to Health Canada for a license to produce and sell cannabis under ACMPR. The Abridgement Application is an update and revision of the Company’s original application for the license under MMPR, in order to conform with ACMPR. The Abridgement Application provides an updated general description of the BC Facility and outlines certain revisions to the Company's original license application including the following:

1. Initial growing space of 30,000 ft (total capacity expected to be 80,000 ft);
2. Initial estimated production of up to 3,500 kg per year (as per the Health Canada application, although the capacity of the facility could be more); and
3. Initial marketing projections assume production is consumed by patients (84%) and other producers/institutions (16%).

Maple Leaf expects that upon approval, the Company may be required to submit pictures, videos, and other relevant documentation to Health Canada to demonstrate that Telkwa is built and ready to produce, after which a licence could then be issued to Maple Leaf, provided Health Canada finds the Company’s submission compliant with ACMPR licensing requirements. The Company is also subject to various regulations from the TSXV and its securities regulator.

The Company’s objective is to acquire the ACMPR license and produce pesticide-free, top quality cannabis from contamination-free soil in its Telkwa facility. Medical cannabis patients will initially be consumers of this product. However, Health Canada has not published any standards or timelines regarding the length of time for approval of license applications under the ACMPR. Therefore, the timeline for grant of the license by Health Canada is uncertain and cannot be estimated since the Company is still in the license application process. There is no assurance that the Company will be qualified to obtain the license. Additionally, there is no assurance that the Company will be able to acquire the required financing, assets or personnel to grow medical cannabis.

US Medical Cannabis

California Medical Cannabis

In October 2014, the Company entered into a letter of intent (“CALOI”) with the Emerald Farm Collective Non Profit Mutual Benefit Corp. (“Emerald”), based out of Anza, California, to supply the medical cannabis needs of Emerald’s medical patients. Maple Leaf’s intention was to provide land, building, equipment and capital to the enterprise, and also to provide consulting services to support Emerald in its production of medical cannabis. Emerald is incorporated and regulated by the California Secretary of State as a non-profit mutual benefit corporation, and is a medical cannabis collective operated for and by qualified patients, with about 250 lawful member patients (“Members”) as of the date of the CALOI. Emerald is obligated to supply its Members with quality cannabis under the terms of a regular commercial operation such as those found in the CALOI. The Collective and the Company subsequently agreed to reorganize their business arrangement by dividing the obligations under the CALOI into two separate agreements, the terms of which supersede the CALOI and are summarized below:

Lease & Property Agreement

• Maple Leaf, operating through its wholly owned subsidiary Golden State Green World LLC (“GSGW”), shall provide capital and resources for up to four greenhouses with capacity to grow enough medical cannabis plants to meet the medical needs of the Members. Estimate cost US$500,000;
• The construction of the facility will be staged in two phases;
• When Emerald starts cannabis production, Emerald will pay rent at a rate of US$15,000 per greenhouse per month;and
• The parties agreed that the initial term of the lease & property agreement will be 10 years with an option to renew for another 10 years.

Consulting Agreement

• Upon the greenhouses becoming fully operational, all responsibility for day to day operations falls to Emerald, at which time Maple Leaf may provide consulting services under the consulting agreement described below;
• After Emerald commences operations, Maple Leaf may provide consulting services which may include advice and information pertaining to all aspects of cannabis cultivation, processing, manufacturing, packaging, transportation and distribution. Additionally, Maple Leaf may advise Emerald on strategies for yield and quality maximization; and
• In consideration of such consulting services (reviewed annually), Emerald agreed to pay a base consulting fee of US$25,000 per month to Maple Leaf, with provisions for performance bonuses up to US$60,000 per month.

In March of 2015, GSGW entered into an agreement to purchase approximately twenty acres of land for an aggregate purchase price of US$120,000. The Company paid US$15,000 in cash, with the balance payable by way of a promissory note secured by a Deed of Trust and bearing interest at the rate of 6% per annum. The maturity date on the promissory note is

March 1, 2020. This land houses the greenhouses required for cannabis production.

In March 2016, Emerald received approval from its regulator to complete the installation of a greenhouse. In May 2016, Emerald received a seller’s permit and resale certificate from the Board of Equalization of the State of California. At that time, Emerald had started to experiment with producing different cannabis strains, and by summer of 2016 cannabis test crops had been planted.

By September 2016, Emerald started to harvest the various test plants it had chosen to cultivate. By the end of 2016 Emerald reported initial production of 300 pounds, comprised of 200 pounds of Early Indica and Late Sativa, and 100 pounds of five other high-quality strains of cannabis. Unfortunately, Emerald also reported later on that it experienced final product delivery issues, and that the sale price that was realized was not as expected. Therefore, Emerald reported to the Company that it did not realize a cash profit. However, pursuant to the agreements in place, the Company had already started to charge Emerald the lease fee and the consulting fee. During the first quarter of 2017 the Company recorded a consulting fee of $99,825 and lease fee (revenue) of $119,790 on its financial statements, but ultimately it did not actually receive these revenues. Maple Leaf therefore did not book the lease and consulting fees in any subsequent period, nor record a receivable in this quarterly report. Emerald did not have the cash to pay to Maple Leaf, in spite of selling a portion of the production, because it was only able to pay its own expenses. Maple Leaf understands that these are initial production and market issues, and do not necessarily affect the integrity of the agreements with Emerald. The Company subsequently agreed not to charge Emerald the lease and consulting fee until fiscal 2018. It is now expected that Emerald’s subsequent harvests will produce positive cash flow to pay Maple Leaf by the end of 2017, that Emerald will pay some portion (or all) of the consulting and lease fees currently recorded, and that the agreement terms between the parties will be confirmed or renegotiated at that time.

The Company’s objective in California is to acquire the necessary licenses or permits and produce pesticide-free, top quality cannabis from contamination-free soil in its California facilities. However, the Federal government of the USA has not yet lifted restrictions and changed statutes that make cannabis production and distribution federally illegal, even though individual states like California have not enforced federal statutes, and have legalized previous restrictions on the production, distribution, and use of cannabis. The State of California government have not published any standards or timelines regarding the length of time for approval of statute changes and license applications. Therefore, the timeline for the grant of licenses, and permits is uncertain and cannot be estimated. There is no assurance that the Company will qualify to obtain required licenses or permits. Additionally, there is no assurance that the Company will be able to acquire the required financing, assets or personnel to grow medical cannabis.

Riverside County in California is in the transition from state issued guidelines to a permitting process that will commence in 2018 once Proposition 64 comes into law, scheduled for January 1, 2018. In Riverside County lays the Anza Valley (where Emerald currently operates), which currently acts as a key supply region for much of the legally licensed retail dispensaries and distributors in Southern California. However, the ability for these farmers to apply for the sort of affirmative licensing (like Colorado and Washington since 2012) has only existed since 2016, and only in parts of California. The California Legislature recently voted on necessary state regulations for medical and recreational marijuana use. Cannabis suppliers are transitioning into a framework that is compliant with a modern regulatory system, created by the “Medicinal and Adult Use Cannabis Regulation and Safety Act” (“MAUCRSA” - SB 94). In Riverside, in particular, the local County Board of Supervisors recognized this problem and voted 3-0 to begin the process of creating a local licensure system based on the MAUCRSA framework.

Maple Leaf does not currently operate cannabis production in California; Emerald does operate cannabis production. Therefore, the Company is by definition in full compliance with California state cannabis regulation. With respect to Emerald, Emerald’s cultivation operation in Riverside is operating in accordance with California state guidelines Proposition 215, SB 420 and the State of California Agriculture guidelines. Issues such as how Riverside County will deal with existing operators who are organized under the older SB 420 framework have not yet been formalized into statute yet, however, experience with other municipalities suggests they will allow for current operators to continue operating in accordance with proposed regulation as long as the grow efforts are disclosed. Mendocino, Humboldt, Trinity, San Diego, and San Bernardino Counties are noted examples of counties that have allowed continued use on existing growing footprints, with disclosure, during the permitting process. In addition, Emerald has advised the Company that it has been in contact with Riverside County’s Drug

Emergency Response Team, and been informed that enforcement entities are not concerned about agricultural farmers cultivating medical cannabis for cannabis cooperatives, and received confirmation that Emerald has been operating in accordance with industry standards and is compliant with California state guidelines and statutes.

Nevada Medical Cannabis

In November 2016, the Company entered into a Letter of Intent (“Henderson LOI”) with BioNeva Innovations of Henderson LLC (“BioNeva”) to purchase 100% of its Medical Marijuana Established Cultivation Permit #C116 (“Permit 116”), for US$500,000 cash. Upon execution of the Henderson LOI, a deposit of US$50,000 (CAD$68,270) was paid to BioNeva. The remaining US$450,000 was payable to BioNeva when the “Transfer of Application” process (to Maple Leaf) is completed by the State of Nevada. On June 15, 2017, the Henderson LOI was updated to allow for the acquisition of all outstanding equity shares of BioNeva on the same terms, instead of just acquiring Permit 116. Subsequent to September 30, 2017 (on October 5, 2017), Maple Leaf announced that BioNeva received conditional approval for obtaining a Medical Marijuana Establishment – Cultivation Facility – class 5 (cultivation) business license. Upon receipt of final approvals from the City of Henderson and the State of Nevada, the Company will begin the process of acquiring all outstanding shares of BioNeva, thereby also acquiring Permit 116, which is owned by BioNeva.

In January 2017, Maple Leaf entered into a purchase agreement to acquire four acres of land in the City of Henderson, Nevada (“Henderson Facility”), for US$875,000. This land will house the Company’s proposed cannabis production facility, to be owned by Maple Leaf’s wholly owned Nevada subsidiary, SSGW LLC (“SSGW”). The Transfer of Application process discussed in the paragraph above also approves the change of address of the production facility from the original BioNeva address to the new SSGW land at Henderson.

In February 2017, the Company received a Distance Separation Analysis (“DSA”) from the City of Henderson with respect to the Henderson Facility as a “Medical Marijuana Establishment – Cultivation Facility”. The Henderson Facility was reviewed for compliance with the Title 19 – Medical Marijuana Establishment Distance Separation Requirements as listed in Table 19.5.5-2 of the Henderson Development Code. Based on the findings in the DSA, the Henderson Facility is suitable for a “Medical Marijuana Establishment – Cultivation Facility” within the City’s municipal boundaries. The DSA may be the most important step in transferring Permit 116 to the Henderson Facility from the old BioNeva address. The next steps require the Company/SSGW to submit its building plan to the City of Henderson for approval, leading to a Conditional Use Permit (“CUP”). If the Company/SSGW is successful in obtaining a CUP, it can ultimately complete construction of the Henderson Facility and start cannabis production, after receipt of all final approvals.

In March 2017, Maple Leaf paid US$875,000 into escrow to acquire the land for the Henderson Facility, and the land title was transferred upon closing to SSGW in April 2017. In May 2017, the Company engaged Paramount to initiate the design, engineering and construction of the Henderson Facility. Maple Leaf intends to develop the 33,500 ft facility in two phases:

an initial phase of 20,000 ft2 and a second phase for the remainder, to be completed after operations have achieved desired productivity and efficiency. In August 2017 an engineering consultant working with MMP continued its work on the building plan required to move the Henderson Facility towards a CUP.

The Company’s objective in Nevada is to acquire the necessary licences or permits and produce pesticide-free, top quality cannabis from contamination-free soil in its Henderson Facility. However, the Federal government of the USA has not yet lifted restrictions and changed statutes that make cannabis production and distribution illegal, even though individual states like Nevada have not enforced federal statutes, and have legalized previous restrictions on the production, distribution, and use of cannabis. In November 2016, Nevada voters approved Ballot Initiative 2, which effectively legalized the production and distribution of cannabis to persons over the age of 21 years in the State of Nevada. Nevertheless, pursuant to the Supremacy Clause of the Constitution of the Unites States, federal law will supersede state law when there is a conflict between the two. Additionally, there is no assurance that the Company will be able to acquire the required financing, assets or personnel to grow medical cannabis.

Nevada state law authorizes the medical use of cannabis for certain qualifying individuals upon the recommendation of their physician. In November 2016, Nevada voters approved Ballot Initiative 2, which effectively legalized the production and distribution of cannabis to persons over the age of 21 years in the State of Nevada. Although, pursuant to the Supremacy

Clause of the Constitution of the United States of America, federal law supersedes state law when there is a conflict between the two. In spite of current federal prohibition, enforcement of federal cannabis laws has been relatively measured in recent years. Under the Obama administration, the Department of Justice issued guidance to its employees in a memorandum commonly referred to as the "Cole Memo". The Cole Memo, while not binding legal authority, laid out several enforcement priorities for federal law enforcement relating to the cannabis industry in states that have legalized cannabis use in some form. See, Memorandum for All United States Attorneys at page 2 (James M. Cole (2013) Dpt. Atty. General). The Cole Memo specifically lists the following enforcement priorities:

• Preventing the distribution of cannabis to minors;
• Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;
• Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
• Preventing state authorized marijuana activities from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
• Preventing violence and the use of firearms in the cultivation or distribution of marijuana;
• Preventing drugged driving and exacerbation of other adverse public health consequences associated with marijuana use;
• Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana on public lands; and
• Preventing marijuana possession or use on federal property.

While the Cole Memo was issued during the Obama Administration, the new Trump Administration has not specifically rescinded the guidance provided in the Cole Memo nor has it adopted an increased enforcement stance since taking office. Further, members of the United States Congress have implemented certain budget restrictions aimed at defunding federal criminal prosecutions in the states where cannabis is legal. While cannabis remains prohibited under federal law, it does appear that cannabis prosecution is a relatively low priority for federal law enforcement at this time. Maple Leaf is not aware of any Nevada state-licensed cannabis business that has been subjected to federal criminal prosecution in any form. Other states that have legalized cannabis for both recreational and adult use such as, Colorado, California, Oregon and Alaska have also experienced very low numbers of prosecutions in recent years for businesses operating in accordance with state laws.

Cannabis businesses in the United States face other risks including banking restrictions and potential tax burdens. Nevadaz has one of the most, if not the most, highly regulated cannabis industry in the United States. Nevada's regulations provide clear guidance for cannabis users and businesses. Nevada's robust regulations make it very unlikely for cannabis businesses to operate in violation of the enforcement priorities of the Cole Memorandum. Nevada's regulations are strictly enforced; any violation of Nevada's regulations such as selling cannabis across state lines, selling cannabis to minors or money laundering is grounds for revocation of the businesses license and possible criminal prosecution under state law.

With respect to recent Company/SSGW activity, the legal requirements to effectuate the transfer of the medical marijuana establishment certificate in Nevada are contained within NRS 453 A, NAC 453A and Chapter 4.116 of the Municipal Code for the City of Henderson. In order to legally transfer the medical marijuana establishment certificate, a company must achieve approval for its change of physical address request from the Nevada Department of Taxation, the principals of the company must submit and pass approved background checks, the company must also acquire a Conditional Use Permit from the City of Henderson for the proposed location of the Medical Marijuana Establishment. After all approvals have been acquired from the State of Nevada and the City of Henderson, the company must complete its construction project at the proposed location, pass all required inspections with both the State and local governments and be awarded its final Medical Marijuana Establishment Certificate. Upon receipt of the final Medical Marijuana Establishment Certificate, SSGW can begin its business operations.

As disclosed herein, Maple Leaf/SSGW have complied with all of these regulations in its preparation to be a producer of medical marijuana in Nevada. However, the material fact is that SSGW has not yet obtained a Medical Marijuana Establishment Certificate, does not yet operate/produce, or even has not yet built a cannabis production facility in Nevada. It therefore is in compliance with all regulations required by the state of Nevada.

References

1. ^ http://www.mlgreenworld.com