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VANCOUVER and DENVER, April 22, 2019 /CNW/ - Cannabis One Holdings Inc. (CSE:CBIS) ("Cannabis One", "CBIS", or the "Company"), an emerging, premier "House of Brands" in North America, is pleased to announce that it has executed three (3) definitive agreements (each, a "Definitive Agreement" and collectively, the "Definitive Agreements") to acquire certain assets of Nevada-based LV 3480 Partners LLC, 3480 Investors, Inc., and Agro Finance LLC (Collectively, "Evergreen Organix").

In connection with the Definitive Agreements, Cannabis One will acquire Nevada State-issued cannabis cultivation & manufacturing licenses, held by NV 3480 Partners LLC and 3480 Hacienda Partners LLC, respectively (the "Nevada Cannabis Licenses"), and related infrastructure, subject to the approval of Nevada State regulators, in addition to the popular flower brand "Fleur" and the award-winning, cannabis-infused product brands, "Evergreen Organix" and "EG.O", among others. With significant consumer appeal, Evergreen Organix has already won numerous cannabis industry awards for its branded product line, including Best CBD Flower for its Fleur-branded "Fire Angel" strain; Best Edible for its Evergreen Organix-branded "Chocolate Chip Cookie" at the 2018 Jack Herer Cup; and second place in the Best Edible category at the recent 2019 THC Classic hosted by Rooster Magazine. With unparalleled quality, and comprehensive brand reach and consumer loyalty, Evergreen Organix has established manufacturing and distribution relationships for the production of its signature suite of brands across six (6) states: Nevada, California, Colorado, Washington, Oregon, and Montana.

Jeffery Mascio, CEO of Cannabis One, commented, "Building on the momentum of our recent announcements related to the acquisition of the 'Honu' and 'Fat Face Farms' brands, Cannabis One is now excited to bring the Evergreen Organix family under the CBIS banner." Mr. Mascio continued, "With the addition of these popular Nevada marques to our growing portfolio of 'Best-of-Breed' brands, and the expansion of Cannabis One's cultivation and manufacturing reach into the State of Nevada, CBIS continues to demonstrate its ability to execute on its stated strategy – Acquire popular brands in vibrant markets and leverage that consumer enthusiasm into multi-state retail and manufacturing expansion."

Following the closing of the transaction contemplated in the Definitive Agreements (the "Closing"), the Company anticipates that the acquisition of Evergreen Organix will:

establish Cannabis One with a significant brand presence in the Nevada recreational and medical marketplace, with an Evergreen Organix management-estimated retail penetration level for its brands in approximately 93.0% of Nevada State -licensed dispensary locations;





recreational and medical marketplace, with an Evergreen Organix management-estimated retail penetration level for its brands in approximately 93.0% of -licensed dispensary locations; provide, through its newly-acquired Nevada Cannabis Licenses, more than 27,000 ft 2 of additional cultivation capacity to the Company, with another 6,000 ft 2 of active manufacturing space, facilitating the throughput of CBIS' growing brand portfolio, which would now include: INDVR , INDVR Fire , INDVR Strains , Honu, Fat Face Farms, Fleur, Evergreen Organix, and EG.O – while also allowing for the manufacture of the Flav , West Edison , and Cheech's Private Stash TM licensed branded product lines;





of additional cultivation capacity to the Company, with another 6,000 ft of active manufacturing space, facilitating the throughput of CBIS' growing brand portfolio, which would now include: , , , Honu, Fat Face Farms, Fleur, Evergreen Organix, and EG.O – while also allowing for the manufacture of the , , and licensed branded product lines; generate an Evergreen Organix management-estimated, annualized US$15.0 million in annual system-wide brand revenue through the Evergreen Organix channel, during fiscal 2019, with an estimated EBITDA margin of between 23.0% and 30.0%, assuming: the continued operating performance of Evergreen Organix's cultivation and manufacturing operations; the successful launch of new products in Evergreen Organix's home state of Nevada ; the continued expansion of Evergreen Organix's licensed product lines in both Nevada and legal, out-of-state jurisdictions; and a return to trend for Nevada cannabis industry participants, following an acute period of competitive, yet – in the opinion of Evergreen Organix – unsustainable pricing practices; and





in annual system-wide brand revenue through the Evergreen Organix channel, during fiscal 2019, with an estimated EBITDA margin of between 23.0% and 30.0%, assuming: the continued operating performance of Evergreen Organix's cultivation and manufacturing operations; the successful launch of new products in Evergreen Organix's home state of ; the continued expansion of Evergreen Organix's licensed product lines in both and legal, out-of-state jurisdictions; and a return to trend for cannabis industry participants, following an acute period of competitive, yet – in the opinion of Evergreen Organix – unsustainable pricing practices; and further Cannabis One's vision to become a true multi-state operator ("MSO") for the manufacturing, distribution, and retail penetration of its proprietary brands and formulations – which the Company believes represent only the highest level of consumer appeal and market reach – while also securing additional long-term reciprocal manufacturing and distribution relationships in California , Washington , Oregon , and Montana .

Jerry Velarde, President of Evergreen Organix, who will be joining the Cannabis One team as Chief Marketing Officer following the Closing, commented, "Evergreen Organix believes CBIS represents an exceptional value proposition and a valued industry partner through which to launch the next phase of our progressive state-legal expansion program", continuing, "Having already established a reputation centered around brand quality and consistency in the minds of cannabis consumers – we are now excited to jointly announce the contribution of our Evergreen Organix suite of brands, which includes the substantial cultivation and manufacturing infrastructure we have been building since 2015 in the Nevada marketplace, to Cannabis One's growing 'House of Brands'."

Under the terms of the Definitive Agreement with LV 3480 Partners LLC, the Company, through its wholly-owned subsidiary, will acquire all intellectual property, product formulations, warehousing and logistics operations, and multi-state intellectual property licensing and manufacturing agreements with contracted partners. Gross consideration payable upon Closing to LV 3480 Partners LLC in connection with the transaction will be US$24,607,506, less any funds previously advanced by Cannabis One or its wholly-owned subsidiary to LV 3480 Partners LLC, in Class B Super Voting Shares of Cannabis One (the "CBIS Shares") at a per CBIS Share price equal to ten (10) times (given that each CBIS Share is convertible into ten (10) Class A Subordinated Voting Shares of Cannabis One (the "Class A Shares")) the greater of: (a) the maximum discount allowed under the policies of the Canadian Securities Exchange (the "CSE") of the closing price of the Class A Shares immediately prior to the date of execution of the Definitive Agreement with announcement of the same by Cannabis One; and (b) the ten (10) day volume-weighted average price of the Class A Shares for the period immediately preceding the Closing, converted into United States Dollars using a ten (10) day simple average of the USD:CAD Noon exchange rate for the period immediately preceding the Closing, as published on www.federalreserve.gov (the "Purchase Price").

The CBIS Shares issued to LV 3480 Partners LLC in connection with the transaction shall be subject to a contractual lock-up, restricting the transfer of the CBIS Shares during the lock-up period. Any CBIS Shares issued pursuant to the Definitive Agreement will be locked up for a total of eighteen (18) months from the date of issuance, during which 33.33% of the issued CBIS Shares will be released from such lock-up on each six (6) month anniversary of the issuance of the CBIS Shares (the "Lock-Up"), pursuant to the terms and conditions of a lock-up agreement to be entered into between LV 3480 Partners LLC and Cannabis One (the "Lock-Up Agreement"). The Lock-Up Agreement will provide for certain exemptions on transfer restrictions, to be mutually-agreed between LV 3480 Partners LLC and Cannabis One, provided that such transferred CBIS Shares remain subject to the Lock-Up following such transfer.

Under the terms of the Definitive Agreement with 3480 Investors, Inc., the Company, through its wholly-owned subsidiary, will acquire two (2) State of Nevada-issued licenses pertaining to the cultivation and manufacture of cannabis and cannabis-related products, subject to the approval of Nevada State regulators. Gross consideration payable upon Closing to 3480 Investors, Inc. in connection with the transaction will be US$15,000,000, comprised of US$14,355,000 in assumed liabilities and US$645,000 in cash.

Under the terms of the Definitive Agreement with Agro Finance LLC, the Company, through its wholly-owned subsidiary, will acquire all cultivation and manufacturing equipment used in the production of the Evergreen Organix, EG.O, Fleur, Honu, INDVR, INDVR Fire, INDVR Strains, Cheech's Private StashTM, and Flav brands in the State of Nevada, in addition to the assumption of all financing and leasing activities to which Agro Finance LLC is currently engaged. Gross consideration payable upon Closing to Agro Finance LLC in connection with the transaction will be US$8,103,117 in cash.

The closing of the transaction contemplated in the Definitive Agreements is subject to receiving all necessary governmental and regulatory approval, including, but not limited to the approval of a transfer of ownership by the Nevada Department of Taxation and the Clark County Department of Business Licenses. Further, it is the intention of the parties to effect the Closing of the Definitive Agreements concurrently.

About Cannabis One

IF WE BRAND IT, THEY WILL COME – Cannabis One Holdings Inc. (CSE:CBIS) is focused on aggregating and optimizing popular cannabis brands throughout North America. With its unique, franchise-ready retail brand, The JointTM, and through targeted acquisition and partnership opportunities, Cannabis One intends to become the premier, globally-recognized, "House of Brands", holding a client portfolio of award-winning products with an extensive market footprint. Through the Company's The JointTM retail concept, Cannabis One intends to leverage the consumer and brand data harvested from its retail locations to bring data-driven analytics to an emerging, branded industry. For consumers, Cannabis One desires to become the definitive source for unparalleled product selection and renowned service in an otherwise fragmented market.

Disclaimer and Forward-Looking Information

Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words "anticipate", "could", "intend", "expect", "believe", "will", "projected", "potential", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the parties' current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. These statements are only predictions. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Forward looking statements include, but are not limited to: the successful Closing; CBIS realizing the anticipated benefits of the Closing; the maintaining of current cultivation and manufacturing operating performance and efficiencies; the anticipated Evergreen Organix management-estimated annualized system-wide brand revenue and related EBITDA margin being realized by fiscal year-end 2019, which depends on a number of factors, including, but not limited to: the continued operating performance of Evergreen Organix's cultivation and manufacturing operations; the successful launch of new products in Evergreen Organix's home state of Nevada; the continued expansion of Evergreen Organix's licensed product lines in both Nevada and legal, out-of-state jurisdictions; and a return to trend for Nevada cannabis industry participants, following an acute period of competitive, yet – in the opinion of Evergreen Organix – unsustainable pricing practices. The Company assumes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

The forward-looking information contained in this release is made as of the date hereof and the parties are not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

To the extent any forward-looking information in this press release constitutes "future-oriented financial information" or "financial outlooks" within the meaning of applicable Canadian securities laws, such information is being provided to demonstrate the anticipated product sales of the Company and the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such future-oriented financial information and financial outlooks. Future-oriented financial information and financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to the risks set out above under the heading "Disclaimer and Forward-Looking Information". The Company's actual financial position and results of operations may differ materially from its management's current expectations and, as a result, the Company's actual revenue may differ materially from the prospective revenue projections provided in this press release. Such information is presented for illustrative purposes only and may not be an indication of the Company's actual financial position or results of operations.

"System-wide brand revenue" and "EBITDA" (earnings before interest, tax, depreciation and amortization) do not have any standardized meaning as prescribed by International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, and, therefore, are considered non-GAAP measures and may not be comparable to similar measures presented by other issuers. Cannabis One believes the non-GAAP measures of "system-wide brand revenue" and "EBITDA margin", combined with IFRS measures, such as revenue and net loss, are useful measures to its shareholders as management relies on such measures to provide insight into future operations. Readers are cautioned, however, that "system-wide brand revenue" and "EBITDA margin" should not be construed as an alternative to financial measures determined in accordance with GAAP or IFRS as an indicator of the Company's financial performance. Readers are also advised that while Cannabis One realizes certain revenue through long-term service arrangements with its client brands, current state regulatory restrictions and U.S. federal restrictions may prevent Cannabis One from consolidating the financial results of such brands.

Cannabis is legal in certain States in the United States ("U.S."), however cannabis remains illegal under U.S. federal laws. Cannabis One intends to conduct its U.S. cannabis operations in a manner consistent with the applicable State laws and in compliance with regulatory and licensing requirements applicable in the applicable State. However, the readers should be aware that any change in federal guidance on enforcement actions could adversely affect Cannabis One's ability to access private and public capital required in order to support continuing operations and its ability to operate in the U.S.

Unlike in Canada which has Federal legislation uniformly governing the cultivation, distribution, sale and possession of cannabis under the Cannabis Act (Federal), readers are cautioned that in the U.S., cannabis is largely regulated at the State level. To the knowledge of Cannabis One, there are to date a total of 33 states, plus the District of Columbia, that have legalized cannabis in some form. Notwithstanding the permissive regulatory environment of medical cannabis at the State level, cannabis continues to be categorized as a controlled substance under the Controlled Substances Act in the U.S. and as such, cannabis-related practices or activities, including without limitation, the manufacture, importation, possession, use or distribution of cannabis are illegal under U.S. Federal law. Strict compliance with State laws with respect to cannabis will neither absolve Cannabis One of liability under the U.S. Federal law, nor will it provide a defense to any Federal proceeding, which may be brought against Cannabis One. Any such proceedings brought against Cannabis One may materially adversely affect its operations and financial performance in the U.S. market.

This press release is not an offer of the securities for sale in the United States. The securities may not be offered or sold in the United States absent registration or an available exemption from the registration requirements of the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") and applicable U.S. state securities laws. The Company will not make any public offering of the securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Related Links

www.cannabisone.life

SOURCE Cannabis One Holdings Inc.

For further information: For investment inquiries, please contact Scott Koyich, Investor Relations at [email protected] or (403) 619-2200.