C$6.7 million secured loan to Heritage Cannabis Holdings Corp.

US$2.0 million secured loan to Cresco Labs Inc.

TORONTO, Feb. 3, 2020 /CNW/ - Trichome Financial Corp. (the "Company" or "Trichome Financial") (CSE: TFC) is pleased to provide an update on its lending activities as it continues to build a diversified portfolio of income-generating secured loan transactions across the cannabis value chain in Canada and the United States.

Portfolio and Activity Update

"The addition of Heritage and Cresco to our portfolio continues our disciplined approach to constructing a diversified and complimentary portfolio of secured loans to companies operating in all aspects of the cannabis industry. These two loans provide our shareholders with attractive contractual returns on both an absolute and risk-adjusted basis and complement our existing loans to premium cultivators James E. Wagner and Good Buds," commented Michael Ruscetta, CEO of Trichome Financial.

Given the near-term operational and financial headwinds facing many operators in the cannabis sector, the current capital raising environment provides Trichome Financial with a robust opportunity set from which to select, underwrite and execute secured loans with attractive contractual payments and other forms of additional consideration that may meaningfully increase return profiles. Specifically, the Company is focused on opportunities such as:

Financing the roll-out of retail locations in Ontario, Canada's largest population base with 14.5 million people and only 28 stores today and growing by up to 20 per month commencing in March;

largest population base with 14.5 million people and only 28 stores today and growing by up to 20 per month commencing in March; Working capital and growth capital for select operators with defensible businesses in both Canada and the US;

and the US; Leveraging our expertise as the U.S. market becomes a larger part of our focus;

Financing for opportunistic and strategic M&A designed to capitalize on current industry dynamics; and

Capital for restructurings, recapitalizations, and other situations where a viable business exists but for the availability of capital.

"The business plan for Trichome Financial was predicated upon both the structural growth opportunity of the cannabis industry globally as well as the countercyclical opportunities that naturally arise with high growth and nascent industries," said Michael Ruscetta. "Our team has never been as busy as they are today as we continue to build our reputation as a preferred financing partner to the cannabis industry while being an effective steward of capital for our shareholders."

Heritage Cannabis Holdings Corp.

On January 31, 2020, Trichome Financial entered into a senior secured loan with Heritage Cannabis Holdings Corp. ("Heritage") (CSE: CANN) for a total investment amount of $6.7 million (the "Heritage Loan"). Pursuant to the execution of the Heritage Loan, Trichome Financial provided Heritage with an initial advance of $4.9 million, with the balance of $1.8 million to be advanced conditionally upon the achievement by Heritage of certain milestones. The proceeds will be used by Heritage primarily for working capital purposes as they continue to scale their operations at licensed subsidiaries to satisfy increased demand for extraction and other specialized downstream services as Cannabis 2.0 products continue to roll-out across Canada.

The Heritage Loan is secured by a perfected first lien on all of Heritage's current and future tangible and intangible assets (including share pledges and guarantees from all subsidiaries) and bears interest at a rate of 9.5% per annum. Including additional consideration, the transaction is expected to yield an internal rate return in excess of 14% to Trichome Financial. The Heritage Loan will become due in full on the date that is 24 months from the closing date and may be prepaid at anytime subject to a make-whole provision.

Cresco Labs Inc.

On January 31, 2020, Trichome Financial advanced US$2.0 million to Cresco Labs Inc. ("Cresco") (CSE: CL) as a syndicate member in Cresco's previously announced US$100 million senior secured term loan (the "Cresco Loan").

The Cresco Loan was first announced on January 23, 2020, with an initial drawdown of US$100 million and a mutual option to increase the Cresco Loan to a maximum of US$200 million. Under the terms of the Cresco Loan, Trichome Financial has advanced US$2.0 million for an 18-month term at an interest rate 12.7% per annum. Including other consideration, this transaction is expected to yield an internal rate of return of 15% to Trichome Financial.

"We are very pleased to have completed our first transaction in the U.S. cannabis sector to a diversified and strategically well-positioned multi-state operator. We have a growing pipeline of opportunities in the U.S. and expect more transactions to follow," said Michael Ruscetta.

As a result of Cresco's acquisition of Origin House, a founding shareholder of Trichome Financial, Cresco is a "related party" of Trichome Financial within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101") because Cresco is a shareholder of Trichome Financial and holds approximately 23% of Trichome Financial's issued and outstanding common shares and the transaction is a "related party transaction" within the meaning of MI 61-101. Marc Lustig, Chairman of the Board of Trichome Financial and a director of Cresco, recused himself from considering this transaction. Trichome Financial is relying on the exemption contained in s.5.5(b) to the formal valuation requirement of MI 61-101 and the exemption contained in s.5.7(a) to the shareholder approval requirements of MI 61-101.

Board Update

Trichome Financial is also pleased to announce that it has appointed Bradley Young to its Board of Directors, effective January 31, 2020. Mr. Young will be replacing Christian Sinclair, who will remain a consultant with the Company assisting Trichome Financial with its business development initiatives with First Nation communities.

Mr. Young is currently Executive Director of the National Aboriginal Forestry Association and has been in that role since 2013. Mr. Young is also an independent director and chair of both Paskwayak Business Development Corp. and the Forest Stewardship Council Indigenous Foundation, among other appointments.

Michael Ruscetta commented, "We look forward to working with Mr. Young as Trichome Financial continues to execute on its strategy of becoming the leading provider of unique credit solutions to the global cannabis sector. We thank Mr. Sinclair for his contributions to Trichome Financial at a pivotal time in its history, having recently completed an equity financing of $16.5 million, successfully listed on the Canadian Securities Exchange and built a large pipeline of lending opportunities to the cannabis sector."

About Trichome Financial Corp.

Trichome Financial is a specialty finance company focused on providing flexible and creative credit solutions to the global legal cannabis market. Trichome Financial was created to address the lack of credit availability in the large, growing and increasingly complex cannabis market. Founded by industry leaders Origin House and Stoic Advisory, Trichome Financial's experienced management team has a unique edge to capitalize on proprietary deal flow and industry insight while developing a first mover advantage as a global cannabis focused specialty finance company. Trichome Financial provides customized financing solutions across the industry value chain to support growth, capital expenditures, mergers, acquisitions, working capital and other needs. Leveraging the combined resources and knowledge of its founders, it is able to offer significant value-added financial, product, market and operational support to its partner companies. Trichome Financial's current assets are all based in Canada and it currently has no operations or assets in the United States.

For further information about Trichome Financial please visit us at www.trichomefinancial.com or @trichomefinance on Twitter and refer to the joint information circular of Trichome Financial and 22 Capital dated May 29, 2019 which is available on the Company's SEDAR profile at www.sedar.com.

READER ADVISORY

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate to, among other things: the expected internal rate of return on both the Heritage Loan and the Cresco Loan, and Trichome Financial's ability to execute on its lending pipeline. The expected internal rate of return on the Heritage Loan and Cresco Loan is premised on the following assumptions, among others: the timing of fixed coupon payments, structuring fees, original-issue discounts, and the time value of money. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; any developments in the U.S. cannabis market; and the delay or failure to receive board, shareholder or regulatory approvals. There can be no assurance that such 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 the forward-looking statements and information contained in this news release. Except as required by law, Trichome Financial assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change.

SOURCE Trichome Financial Corp.

For further information: Michael Ruscetta, CEO, (416) 467-5229, [email protected]; Marc Charbin, Investor Relations, (416) 467-5229, [email protected]