1933 Industries : Management Discussion & Analysis - For the Three and Nine Months Ended April 30, 2023 and 2022

MANAGEMENT DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 2023 AND 2022

(in Canadian Dollars, except where noted)

This Management's Discussion & Analysis ("MD&A") of 1933 Industries Inc. ("1933", or the "Company") supplements but does not form part of the unaudited condensed interim consolidated financial statements for the three and nine months ended April 30, 2023 and 2022 and the notes thereto (referred to hereafter as the "financial statements").

The financial statements have been prepared by management in accordance with International Financial Reporting Standards ("IFRS" or "GAAP"), including IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"). As such, the financial statements do not include all of the information required by IFRS for annual financial statements and should be read in conjunction with the Company's audited consolidated financial statements for the years ended July 31, 2022 and 2021 ("Annual Financial Statements") and the annual Management's Discussion & Analysis for the years ended July 31, 2022 and 2021 ("Annual MD&A").

The Company's certifying officers are responsible for ensuring that the financial statements and MD&A do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made. The Company's certifying officers certify that the financial statements together with the other financial information included in the filings fairly present in all material respects the financial condition, financial performance, and cash flows of the Company as of the date of and for the periods presented in the filings.

The first, second, third and fourth quarters of the Company's fiscal years are referred to as "Q1", "Q2", "Q3" and "Q4", respectively. The nine months ended April 30, 2023 and 2022, are referred to as "YTD 2023" and "YTD 2022", respectively. All amounts are presented in Canadian dollars, the Company's presentation currency, unless otherwise stated. References to "USD" are to United States dollars.

Statements are subject to the risks and uncertainties identified in the "Risks and Uncertainties", and "Cautionary Note Regarding Forward-Looking Statements" sections of this document. The Company has included the non-GAAP performance measures of Earnings before interest, taxes, depreciation, and amortization ("EBITDA") and Adjusted EBITDA per share within this document. For further information and detailed calculations of these measures, see the "Non-GAAP Measures" section of this document.

The Company is publicly traded on the Canadian Securities Exchange under the symbol "TGIF" and quoted on the OTCQB under the symbol "TGIFF". Additional information relating to the Company is available on the Company's website at www.1933industries.com, and on SEDAR at www.sedar.com. Information in this MD&A is prepared as of June 29, 2023.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains certain "forward-looking statements" which may include, but are not limited to, statements with respect to the future financial or operating performance of the Company. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variation (including negative variations) of such words and phrases, or statements that certain actions, events, or results "may", "could", "would", "might", or "will" be taken, occur or to achieve.

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1933 INDUSTRIES INC.

MANAGEMENT DISCUSSION AND ANALYSIS

For the three and nine months ended April 30, 2023 and 2022 (In Canadian dollars, except where noted)

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the Company's business model; U.S. regulatory landscape and enforcement related to cannabis, including political risks; risks related to capital raising due to heightened regulatory scrutiny; risks related to quantifying the Company's target market; risks related to access to banks and credit card payment processors; risks related to lack of U.S. federal trademark and patent protection; risks related to the enforceability of contracts; risks related to potential violation of laws by banks and other financial institutions; risks related to service providers withdrawing or suspending services under threat of prosecution; risks related to tax liabilities; and heightened scrutiny by Canadian regulatory authorities.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated, or intended. There can be 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. Accordingly, readers should not place undue reliance on forward-looking statements.

OUTLOOK AND THE PATH FORWARD

1933 is a licensed cannabis operator with cultivation, production, manufacturing, and distribution assets based in Las Vegas, Nevada. The Company operates two subsidiaries that combined, produce a full-range of cannabis and hemp-based products. The Company cultivates and produces its own branded cannabis products in a purpose-built, indoor cultivation facility under perpetual harvest cycle. Its craft-style flower cultivation is supported by an integrated production facility, focused on high-quality concentrate products that are sold directly to licensed dispensaries in the State of Nevada. The Company's brand of cannabis flower, pre-rolls and extraction products have strong wholesale penetration in dispensaries in Las Vegas, while its ultra-craft,select-batch premium brand offers unique, exotic strains that appeal to cannabis connoisseurs. In addition, the Company manufactures a proprietary line of hemp-infused wellness products for sale across the United States, offering a variety of effects- based cannabinoid-infused products and form factors that appeal to a wide range of consumers.

The Company holds cannabis licenses for cultivation, processing, and distribution in Nevada's limited license regime. The Company's revenue is derived from wholesale cannabis sales in Nevada, and from the sale of hemp-derived consumer packaged goods sold B2B and direct to consumers via ecommerce at cannahemp.com. The Company's strengths lie in its expertise as a top cultivator in the Las Vegas market and in its ability to attain shelf space in dispensaries.

During the reporting period, the Company completed a retrofit and upgrade of the irrigation system in its cultivation facility. Although revenues increased from the previous quarter, margins were impacted as a result of lower flower yields during the period of construction. The Company recorded revenues of $4.1 million, a 12% increased from Q2 2023. Phase 2 of the improvements and maintenance to the cultivation facility, including the addition of new lights and fans, will continue well into Q4 2023. Pricing compression continues to impact cannabis operators in Nevada and sales of cannabis products are down industry wide. The Company's hemp-infused consumer packaged goods recorded positive gross margins, although the demand for hemp-infused products remains soft both in wholesale and retail stores as well as via e-commerce.

Demand for the Company's AMA products remains strong, and once the upgrades to its cultivation facility are completed, the Company will be well positioned to take advantage of the demand for cannabis flower and cannabis products. On November 30, 2022, the Nevada Cannabis Compliance Board issued 40 cannabis consumption lounge prospective licenses. On June 20, 2023, the Nevada Cannabis Compliance Board gave approval to three cannabis consumption lounges to move forward. Those include Planet 13, Thrive Cannabis, and SoL Cannabis. The consumption lounges must still obtain local approvals and complete their buildout. The current target for consumption lounges to open is end of year 2023 or early 2024. Consumption lounges will provide a safe, legal place for tourists to consume cannabis. It is currently illegal to consume cannabis anywhere outside of private residences. It is expected that the launch of consumption lounges will create a new attraction for visitors to the state and expand cannabis-related tourism. The Company is well positioned to benefit from increased demand, flower price stabilization, and the strength of its top brand and in-demand products that deliver excellent value to consumers.

Operationally, the Company has made substantial improvements in lowering its debt load, reducing expenses and conserving its working capital over the last several quarters. The Company has not significantly added to its capital structure, as it has not conducted new treasury raises and has not added any new debt to its balance sheet.

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1933 INDUSTRIES INC.

MANAGEMENT DISCUSSION AND ANALYSIS

For the three and nine months ended April 30, 2023 and 2022 (In Canadian dollars, except where noted)

COMPANY OVERVIEW AND DESCRIPTION OF THE BUSINESS

1933 Industries Inc. is a brand-focused cannabis company with operations in the United States, with cultivation, extraction and manufacturing facilities based in Las Vegas, Nevada. Operating through two subsidiary companies, the Company owns leading cannabis brands as well as licensed cannabis cultivation, extraction, processing, manufacturing and distribution assets. The Company owns 91% of Alternative Medicine Association LC ("AMA"), 100% of AMA Production LLC, and 100% of Infused MFG. ("Infused").

In Nevada, the Company operates two subsidiaries: AMA, a licensed cannabis cultivator, extractor, product manufacturer, and distributor; and Infused, a manufacturer of hemp-extracted wellness products.

The Company operates in three sought-after verticals:

• Craft cannabis flower cultivation;
• Extraction of cannabis concentrates and;
• Manufacturing of proprietary cannabinoid branded goods, focusing on CBD, CBG and CBN.

AMA's wholesale cannabis products include premium craft-style cannabis, infused pre-rolls, full spectrum oils, high quality distillates, proprietary blends of terpenes, vaporizer products and boutique concentrates such as shatter, crumble, batter, sugar wax, diamonds, and cured and live resins, sold under the house brands AMA and Level X. AMA cultivates and wholesales its products to regulated medical and adult-use dispensaries in the state. With an extensive selection of products, the AMA brand has strong penetration into dispensaries throughout Nevada, where it appeals to a wide range of both medical and recreational consumers. The AMA brand combines craft style cultivation, quality and competitive pricing, while the Level X brand offers exclusive strains and premium quality.

Cannabis flower is cultivated in the Company's 68,000 sq. ft., purpose-built,state-of-the-art facility, serving the Las Vegas market. Biomass (remaining parts of the plant that contain THC such as sugar leaf trim and popcorn/small buds) is utilized to produce AMA's extensive line of concentrates.

Infused develops proprietary formulations for its Canna Hemp™ line of wellness products. With over 60 products in its portfolio, Infused manufactures and distributes products in a variety of verticals and consumption formats, including: effects-based tinctures, lotions, creams, vape pens and cartridges, gummies, and capsules for Sleep, Relief, Calm, Focus, Energy and exercise recovery. High-grade CBD and a proprietary blend of cannabis terpenes formulated for specific effects are key differentiators for the Canna Hemp™ line. The Company introduced previously untapped cannabinoids Cannabigerol (CBG) and Cannabinol (CBN) to its portfolio of products and continues to develop a pipeline of products to meet changing consumer demands.

Infused distributes its branded products through wholesale and retail channels in Nevada and across the US via its e-commerce platform at cannahemp.com. The Company is focusing on increasing marketing efforts by strengthening its e-commerce business and by working in conjunction with dispensaries and specialized distributors to increase brand awareness and promote its products.

Infused has branched out into functional mushroom product category under the brand Ether Wellness. Infused recently launched a functional mushroom capsule sku - Ether Wellness Balance 10X Complex. Infused plans on further developing out the Ether Wellness brand of functional mushroom and other wellness products.

The Company abides by strict quality assurance standards, implementing required policies and procedures and adhering to licensing requirements set by regulators across all levels of government in order to ensure the safety, consistency and quality of its products.

The Company's common shares are listed for trading on the Canadian Securities Exchange under the symbol "TGIF", and traded on the OTC Markets under the symbol "TGIFF".

The Company's head office is located at #300-1055 West Hastings Street, Vancouver, BC V6E 2E9. The head office of operations is located at 3370 Pinks Place, Suite B, Las Vegas, Nevada 89102.

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1933 INDUSTRIES INC.

MANAGEMENT DISCUSSION AND ANALYSIS

For the three and nine months ended April 30, 2023 and 2022 (In Canadian dollars, except where noted)

AMA - Cultivation and Extraction Segment

AMA's business involves the growing of cannabis indoors for personal medicinal and recreational use and the production of premium, boutique concentrates for the Nevada market. AMA began commercial production in April 2015 when it was the first Medical Marijuana Establishment or "MME" approved for cultivation in Southern Nevada. Its first crops were harvested, dried, packaged and sold in October 2015 and it has produced cannabis on a commercial scale in Nevada since then, providing a first- mover advantage.

Market Plans and Strategies

The Company's business model is based on servicing the existing medicinal cannabis patient base in Nevada (which has approximately 3.0 million residents) and the recreational cannabis consumers, including those who visit Las Vegas each year (about 42.9 million visitors pre-Covid-19 pandemic). The Company is an established wholesale supplier of unique branded flower and extraction products to licensed dispensaries and cannabis stores. As its branded image and reputation is well established, the Company may license or acquire other cannabis businesses in the United States that have legalized medicinal cannabis and/or recreational cannabis specific brands with recurring sales to a loyal and growing clientele.

The Company believes that the constantly evolving regulatory environment for the production and distribution of recreational cannabis within the U.S., and the dispensing of both medicinal and recreational cannabis will be disruptive for both producers and consumers, transforming the current industry into one of commercial scale. The Company is focused on establishing a portfolio of high quality, premium cannabis products that have wide appeal to a growing and varied consumer base. The Company has developed a comprehensive marketing program to create visibility and awareness in the market for its products. AMA markets its products locally, via social media, in-store programs, as well as via targeted marketing campaigns in conjunction with dispensaries and educational programs targeting budtenders and consumers.

Hemp Infused Products Segment

Infused focuses on developing, formulating, and producing CBD, CBG and CBN hemp-based products and brands for retail sale and use in jurisdictions where permitted by law and regulation in the US.

Cannabinoids, as utilized by Infused, are extracted from industrial hemp, sourced from legal suppliers in the United States. Infused manufactures and distributes its products under the following segments:

1. Canna Hemp™ hemp-derived cannabinoid products that include tinctures, lotions, creams, vape pens and cartridges, gummies, and capsules;
2. Canna Hemp X™ products targeting the action sports vertical, including pre and post workout tinctures, and muscle balms;
3. Canna Hemp™ products containing hemp-seed oil and free of CBD.

The Canna Hemp™ line is marketed through a variety of brick-and-mortar retail outlets, and retail dispensaries in Nevada and Arizona under its various segments, and direct to consumers via its e-commerce platforms. The Company believes that its success in the market is achieved by offering a broad range of premium quality products with wide-range appeal at competitive prices and delivered through outstanding client service under a well identified brand.

Combined, the AMA and Canna Hemp™ brands offer over 100 different products. The Company has been focused on cultivating craft flowers delivered to customers at competitive prices with an extensive line of news strains, and top-tierultra-craft line branded as Level X. The Company believes that carrying a consistent base of high-quality strains and cannabis products, including hemp-based products, is essential to its long-term success.

Infused is growing its product portfolio via the expansion into the functional mushroom category. Infused has created the Ether Wellness brand to grow its portfolio of mushroom based products targeting natural wellness categories.

DESCRIPTION AND OUTLOOK OF THE UNITED STATES LEGAL CANNABIS INDUSTRY

For a detailed description of the U.S. legal cannabis industry that the Company operates within, please refer to the Company's MD&A for the years ended July 31, 2022 and 2021.

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1933 INDUSTRIES INC.

MANAGEMENT DISCUSSION AND ANALYSIS

For the three and nine months ended April 30, 2023 and 2022 (In Canadian dollars, except where noted)

Q3 2023 CONSOLIDATED OPERATING FINANCIAL HIGHLIGHTS

• Total revenues were $4.1 million for Q3 2023 and $4.3 million for Q3 2022.
• Expenses of $1.8 million for Q3 2023 compared to expenses $13.7 million for Q3 2022. The high expenses in Q3 2022 were primarily a result of goodwill impairment relating to Infused Mfg. It is the priority of the Company's executive management to continue to reduce costs, with the goal of maintaining consistent profitability in the near future.
• Gross margin was a loss of $1.6 million or (39)% for Q3 2023 and a profit of $2.0 million or 47% for Q3 2022. The decrease in gross margin was due primarily due to delayed harvests and lower yields while the Company upgraded and retrofitted the building's complex irrigation piping system.
• Net loss was $3.4 million for Q3 2023 and $12.4 million for Q3 2022. Prior year comparable period net loss was primarily due to goodwill impairment relating to Infused Mfg.
• Adjusted EBITDA was a loss of $2.8 million for Q3 2023 and a loss of $11.1 million for Q3 2022.

Q3 2023 KEY DEVELOPMENTS

• During Q3 2023, convertible debentures of $166,000 and interest payable on the convertible debentures of $52,125 were converted into 4,362,509 common shares of the Company.

SUBSEQUENT EVENTS

• Subsequent to April 30, 2023, convertible debentures of $100,000 were converted into 2,676,666 common shares.
• Mr. Ranson Shepherd resigned from the Board and Mr. Curtis Floyd was appointed as Director.
• Infused launched the non-CBD Ether Wellness brand to capitalize on the growing demand of functional mushrooms and other wellness products.

REVIEW OF QUARTERLY RESULTS

A summary of the Company's result for the eight most recently completed quarters is as follows:

	Q3 2023	Q2 2023	Q1 2023	Q4 2022
	$	$	$	$
Revenue	4,073,142	3,626,156	5,636,070	2,607,511
Net loss	(3,362,402)	(359,191)	(1,166,851)	(3,921,644)
Basic / diluted loss per share	(0.01)	(0.00)	(0.00)	(0.01)
Number of weighted average shares	457,534,847	453,578,137	451,045,719	450,699,319
	Q3 2022	Q2 2022	Q1 2022	Q4 2021
	$	$	$	$
Revenue	4,256,280	3,208,082	2,466,064	2,510,169
Net loss	(12,375,391)	(819,814)	(948,825)	(2,642,456)
Basic / diluted loss per share	(0.03)	(0.00)	(0.00)	(0.01)
Number of weighted average shares	450,699,319	450,699,319	450,640,574	449,723,437

The Company is expected to remain subject to many of the risks common to early-stage enterprises for the foreseeable future, including challenges related to laws, regulations, licensing, integrating, and retaining qualified employees; making effective use of limited resources; achieving market acceptance of existing and future solutions; competing against companies with greater financial and technical resources; acquiring and retaining customers; and developing new solutions.

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