Dear Friends,

It’s been another whirlwind period at Tinley’s Long Beach facility. Several co-packing clients are in regular production, with new flavours and formats being added each month. We’re also teeing up new packaging and materials for our newest production lines. Plus, we’ve added several prominent new co-packing clients. We’re excited to have successfully received commercial acceptance of our tunnel pasteurizer, which makes our facility the only one in the state to offer such functionality for cannabis beverages. To fulfill growing demand, we are planning to upgrade our mini “shot” line, and we are preparing for launch of our canning line with client production scheduled this quarter. Our margins and overall financial performance have improved, and our Tinley’s USA president has invested nearly half a million dollars in recent months, adding to his existing position. Just a few weeks ago, the facility received the final approvals required to activate its onsite distribution licence, which will enable the company to capture additional economics from each own-brand and client-brand bottle sold. Finally, we’re excited about our upcoming launch in Canada, which will place us in the two largest cannabis markets in the world.

We continue to thank our shareholders, customers, vendors and other constituents for their steadfast support, and are pleased to provide additional detail on our activities:

Co-Packing Clients

Since the summer, we’ve added 4 new third-party brand clients to the Lakewood Libations, Inc. (Lakewood) manufacturing line-up at Tinley’s Long Beach Facility, bringing the total number of clients to 13. These new clients include:

1. Soma’s “Hoppin’ High Ride High-PA”

“THCeer’s!’ ‘Hoppin’ High Ride”, is planned for distribution to California dispensary and home delivery licensees throughout Q1 2022. (concept artwork only.)

Developed in collaboration with the brewmasters at BJ’s Restaurants, one of America’s largest national brewhouse chains (NASDAQ: BJRI), who have licensed selected non-alcoholic beers through Soma Beverages. “Hoppin’ High Ride High-PA” will be produced without preservatives through a newly engineered, closed-loop cannabis infusion and pasteurization process that is unique to Tinley’s Long Beach facility.

2. Highbridge Premium

Give your Valentine some Higher Love! Cannabis-infused Passion Potion by High Bridge Premium, Proudly co-packed at our Long Beach facility

Recently completed production of “HigherLove™” Passion Potion. HighBridge’s HigherLove™ is designed as an aphrodisiac-inspired “shot”, with a raspberry-mint flavour. Each 2oz. bottle contains a variety of herbs traditionally valued for their aphrodisiac properties, botanicals, and other exotic ingredients, as well as 5mg of THC.

3. Mary Y Juana

Four ‘Mari y JuanaTM’ Mexican soft drink-inspired beverages are planned for production at Tinley’s Long Beach facility. (Concept artwork only.)

Inspired by popular Mexican soft drinks that resonate with Latino tastes: Guava (Guayaba), Pineapple (Piña), Mandarin Orange (Mandarina), and Tamarind (Tamarindo). Developed and marketed by Matt McGinn, a prominent cannabis beverage and distribution entrepreneur who is also involved with Hardcar Distribution.

4. Green Monké

‘Green Monké’ Cannabis-Infused Happy Sodas are expected to begin production in five flavours on the can line at Tinley’s Long Beach Facility in Q1 2022, with near-monthly repeat runs planned. (Current products shown)

Owned by St. Peter’s Spirits, Green Monké is a line of sparkling drinks currently available in THC-infused format in California and CBD-infused format in the United Kingdom. Each tropically-flavoured product is formulated with a fast-release microencapsulation emulsion and only 25 calories per can. Green Monké THC-infused beverages launched in Canada in October 2021 and are contract manufactured by BevCanna Enterprizes, the same facility where our Canadian versions of Tinley’s TonicsTM products will be produced north of the border.

Long Beach Facility Enhancements

1. Tunnel Pasteurizer – Tunnel pasteurizers enable beverages to be produced without preservatives, enabling more natural formulations and the ability to control micro-organisms to maintain safety for both product and containers in one process step. Tinley’s is the only facility in California to offer this equipment for cannabis beverages. With cannabis consumers – and California consumers in general – seeking preservative-free products, we believe this equipment will give many of the company’s co-packing clients a significant competitive advantage by unlocking several additional beverage styles and formats.

Our tunnel pasteurizer is now complete! Enables preservative-free cannabis beverages, the only such equipment in the state.

2. Mini Line Upgrade – Mini “shot” bottle formats have proven to be highly popular with cannabis consumers. As a result, Tinley’s has decided to significantly increase the capacity of its mini “shot” capabilities in response to aggressive growth in demand. This upgrade will take much of 2022 to complete, and the company will continue to use its current mini line throughout the year. – Mini “shot” bottle formats have proven to be highly popular with cannabis consumers. As a result, Tinley’s has decided to significantly increase the capacity of its mini “shot” capabilities in response to aggressive growth in demand. This upgrade will take much of 2022 to complete, and the company will continue to use its current mini line throughout the year.

Give your Valentine some Higher Love! Cannabis-infused Passion Potion by High Bridge Premium, Proudly co-packed at our Long Beach facility

3. Canning Line – Our canning line is integrated with the tunnel pasteurizer as an optional step. We expect to disclose details of the first client run on the can line as the first can line client’s input materials near readiness for batching to begin.

4. Distribution Licence – Just a few weeks ago, we received approval by the City of Long Beach to begin use of Lakewood’s state distribution licence. We completed the first testing, quarantine and lab sampling processes mandated by California’s Department of Cannabis Control under one roof at our Long Beach facility. These processes were completed for our Tinley’s ’27TM Coconut Cask products, followed by batches of client brands: Cannabis Quencher’s new “CQ” shot, and Pabst Lab’s “Not Your Father’s Root Beer” in 12 fl oz bottles. This on-site ‘first-mile’ distribution capacity adjacent to manufacturing will drive additional economics from each product batch, gained from accelerated time to market, storage revenues, first-mile distribution fees, and other related benefits of efficiency and scale for us and our co-packing clients. These advantages help accelerate Tinley’s progress towards the goal of increasing shareholder value, while building critical mass in the growing beverage category through own-brand and client-brand beverages produced by Lakewood.

5. Lakewood Libations Acquisition – Many people have been asking about Lakewood Libations Inc. Lakewood is the company that owns the manufacturing and distribution licences for Tinley’s Long Beach facility. Tinley has entered into a purchase agreement to acquire all of the equity interests of Lakewood, including the manufacturing and distribution licences. With the distribution licence now active, the company is moving forward with the closing of this transaction. While current control of the licences and the purchase of 100% of the shares are fully contracted, the closing of this acquisition transaction is subject to certain standard conditions precedent including applicable regulatory approvals.

Financial Performance

1. Gross margin and revenue improvements – Typically it takes significant volume to drive positive margins in the beverage industry. With early revenue in Q3, Tinley has already achieved positive gross margins, which we expect will continue to improve as we execute our growth and improvement plans at our Long Beach facility. This reflects the strength of our scalable co-packing business model combined with manufacturing process and supply chain improvements for our Tinley’s-branded products. Given the nature of our co-packing business, where most costs are fixed, we expect our margins will continue to strengthen as volume continues to meaningfully grow. We also expect the activation of the on-site distribution licence to further drive additional economics from each drink produced.

2. Industry Position – Headset Data is showing significant increases in consumer demand for cannabis beverages. In many ways, this is being driven by the price and quality improvements that are enabled by scaled facilities like Tinley’s. However, with Tinley’s only scaled competitor having been recently acquired, Tinley’s now offers the only scaled cannabis bottling facility in operation that is primarily devoted to third-party brands. We believe that growing consumer demand for beverages, combined with a newly reduced set of competitors, makes Tinley’s client prospects and margin defensibility better than ever. In short, we predict that drinks will increasingly only be successful in California if produced at a scaled facility, and that a significant portion of the cannabis drinks on shelves in California this year will be produced at Tinley’s Long Beach facility.

3. Richard Gillis Share Purchases – Tinley’s USA President & Chief Operating Officer and member of the Office of the CEO, Richard Gillis, encouraged by the company’s growth and unique industry position, has bought over $450,000 units at current prices over the past few months.

Canadian Expansion

Last but not least, we know many – if not most – of our shareholders live in Canada and are thirsty for our products! We’re delighted that our Canadian manufacturers have received purchase orders for Tinley’s products from the Ontario Cannabis Store (“OCS”) – possibly the world’s largest wholesale cannabis buyer, exclusively representing over 1,000 stores. Tinley’s brand production is scheduled for Q1 and for OCS release in Q2. The products to be sold in Ontario are the Canadian versions of the Company’s Emerald Cup award-winning Tinley’s ’27™ Coconut Cask, branded in Canada as Tinleys ’27™ Smooth Coconut, as well as the company’s summer classic Tinley’s Tonics™ La Paloma ready-to-drink sparkling ‘mocktail’, produced in Canada as Tinley’s Classics™ Mystic Dove™. Additionally, we’ve made submissions to the Alberta and British Columbia provincial cannabis boards (ALGC and BCLDB, respectively) for 2022 listings. The release of these products north of the border promises to be a major, long-awaited moment in the history of the company. We’ve heard from many of our thousands of Canadian shareholders that they’re ready to be both ambassadors and customers of our Tinley’s-branded products!

Tasting at Four Twenty Bank
Tinley’s Paloma and Coconut Rum-inspired cannabis beverages to launch in Canada in Q2 (California Versions Shown)

These achievements represent the success of multiple, parallel multi-year buildouts, and we especially wish to thank our shareholders for their longstanding, continued support during this time. These types of facility, infrastructure and supply chain buildouts typically take several years to complete, and we believe it could be some time before more competitors enter the industry in California with a facility like ours. We began these projects well ahead of the curve, and as a result we’re now in a favourable position just as the infused beverage category begins to gather steam. With another scaled cannabis bottling facility in the state having been recently acquired, we are in the process of signing up production for a significant portion of the cannabis drinks available in California. With these advantages in hand, Tinley’s is able to pursue multi-state opportunities as well as expansion into additional provinces across Canada.

With thanks,
The Tinley’s Beverage Company Team

Forward-Looking Statements
This article contains forward-looking statements and information (collectively, “forward-looking statements”) within the meaning of applicable Canadian securities laws. Forward-looking statements are statements and information that are not historical facts but instead include financial projections and estimates, statements regarding plans, goals, objectives and intentions, statements regarding the Company’s expectations with respect to its future business and operations, marketing and competitive assessment and opinions, the closing of the acquisition of Lakewood, the timing of the Company’s manufacturing capability enhancements and their uniqueness, production runs, competitive capability assessments, expected benefits and advantages of new production capabilities and partnerships, successful completion of the product listing process with the OCS, expected timing for Canadian product manufacturing and distribution, expected timing of the launch of online purchases and retail presence at the OCS, expected increased distribution in Canada, approval of the BCLDB and AGLC including the timing for same, revenue growth, management’s expectations regarding growth, phrases containing words such as “ongoing”, “estimates”, “expects”, or the negative thereof or any other variations thereon or comparable terminology referring to future events or results, or that events or conditions “will”, “may”, “could”, or “should” occur or be achieved, or comparable terminology referring to future events or results. Factors that could cause actual results to differ materially from any forward- looking statement include, but are not limited to, delays in obtaining or failures to obtain required governmental, environmental, or other project approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices and delays in the development of projects. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law. Products, formulations, and timelines outlined herein are subject to change at any time.

© 2022The Tinley Beverage Company Inc
Cannabis-Infused products are manufactured by:
Lakewood Libations, Inc. Long Beach, California.
CDPH Lic. 10004047