[ACCESSWIRE]

Well-Positioned and Highly Profitable Platform for Growth in the North American Cannabis Market; US$27 Million Fund Raising Completed to Finance the Acquisition and Further Expansion; Company to Start Trading on the Canadian Securities Exchange in Next Few Days

TORONTO, ON / ACCESSWIRE / January 23, 2017 / The Canadian Bioceutical Corporation (the "Company" or "BCC") (CSE: BCC, OTC PINK: CBICF) today announced that, together with its wholly owned subsidiary CGX Life Sciences ("CGX"), a Nevada incorporated entity, and subject to CSE approval, it has completed the acquisition of a group of companies active in the Arizona market for medical cannabis. Concurrent with the acquisition, the Company has completed a private placement for gross proceeds of US$27 million (~CA$35.5 M), and is effecting a listing of its shares on the Canadian Stock Exchange ("CSE").



Transaction Highlights:

Arizona operations form strong platform for growth into multiple U.S. states

Wholesale cannabis extracts brand servicing over 40% of Arizona dispensaries



Two dispensaries in rapidly growing Phoenix Metropolitan Area with 4.6 million people



Fully banked

Strong revenue growth and highly profitable

166.5% four-year revenue CAGR - forecasted to March 31, 2017



FY to March 31, 2016 - US$8.5 million (~CA$11.2M)





FY to March 31, 2017(E) - $19.2 million (~CA$25.5M)



323% y-o-y EBITDA growth anticipated



FY to March 31, 2016 - $1.6 million (~CA$2.1M)





FY to March 31, 2017(E) - $6.6 million (~CA$8.8M)



A growing share, currently at around 5.2%, of the Arizona market, which is anticipated to grow to over US$1.2 billion (~CA$1.6Bn) if adult use is legalized

Attractively priced at US$25 million - US$15m cash + US$10m promissory note

Considerable discount to Canadian peers, despite substantially stronger financial fundamentals, significant growth prospects and strong operational history

Transaction includes attractive option to acquire control position in Nevada cannabis operation

Wholesale operation with cultivation and sale of Melting Point Extracts ("MPX") and other branded cannabis products to legalized adult use market in Nevada



Based in Las Vegas, which records 42 million visitors annually

"This transaction, we believe, makes us the most profitable cannabis company listed in Canada," stated Scott Boyes, CEO of BCC. "More than that, it creates a platform for growth in a number of very attractive U.S. markets, which are forecast to reach US$22 billion by 2020. To create further shareholder value, we are pursuing a two-tier strategy. Firstly, we are expanding the production capacity of our Arizona operations, and will leverage the performance and strength of our brands to drive continued organic growth. We will support this growth through expanded production capacity, as well as the use of innovative technology. Secondly, we will pursue attractively priced acquisition opportunities throughout the U.S. Many operations in the U.S., though profitable, are small and undercapitalized and require a financially strong partner to pursue further growth. The strength of our balance sheet, with growing cash flow positive operations, and our proven access to capital, create the financial fire power required to implement this strategy."

Arizona Operations:

In compliance with Arizona regulations, while not cultivating or selling cannabis products themselves, pursuant to long-term management agreements the acquired entities provide material support to two not-for-profit licensees, which directly own, possess or sell marijuana and marijuana-infused products. Current production capacity of the Arizona entities is approximately 1.6 million grams of dried flower per year and approximately 60,000 grams of concentrate per year.

Under the terms of the management agreement, CGX will support two existing brands in Arizona. Under the Health for Life ("H4L") brand, two licensed dispensaries operate in the Mesa area, which is part of the rapidly growing Phoenix Metropolitan Statistical Area (MSA) with a population of 4.6 million people. The dispensaries sell dried flower and derivative cannabis product to authorized patients.

Additionally, the Company supports the Melting Point Extracts ("MPX") brand, which is focused predominantly on the sale of derivative cannabis products, such as oils, through the H4L dispensaries and through its wholesale business to other Arizona dispensaries. MPX was selected as the Best Concentrate by the Phoenix New Times in September, 2016, and in November of 2016, MPX won the Herer Cup as Nevada's best hybrid concentrate. The quality of the award winning MPX products has facilitated rapid growth of the brand's product sales. Consequently, the MPX wholesale business now supplies over 40% of Arizona dispensaries. The Company anticipates leveraging its brand strength to further penetrate the wholesale market, both in Arizona and in other states.

Having commenced commercial operations in Q1 of 2014, the acquired companies achieved profitability in Q2 2015. Management estimates that H4L and MPX combined, based on 2016 market and revenue numbers, command a market share of approximately 5%. Presently, the Company is expanding its production capacity to approximately 3.2 million grams of cannabis per annum, as well as investing in new equipment to produce extract based products to expand reach and market share of its MPX brand.

The Arizona Market:

Arizona has a vibrant and rapidly growing medical cannabis programme with, to date, some 100,000 registered medical cannabis users. Subsequent to the 'no' vote against legalization in November 2016, the growth rate of patient applications has risen considerably. While market dynamics point to continued growth, barriers to enter the Arizona market are substantial, with the current number of operating dispensaries at 95, and the total number of licensees permitted capped at 126.

In absolute terms, the Arizona medical cannabis market is expected to grow from around $270 million in 2016 to US$1.2 billion in 2020, if legalization of adult use is also implemented. Based on the strength of its brands and the expansion efforts underway, the Company anticipates it will be able to attract a sizeable portion of the medical market growth to its dispensaries, as well as position the Company well once adult use is legalized.

"The Arizona market is a very attractive platform on which to build our U.S. operations," stated Beth Stavola, President Designate of CGX. "Product prices are relatively high, especially compared to Canada, and operational costs are relatively low, creating an ideal environment for sustainable growth of revenues and profitability. Furthermore, despite the no-vote, we believe that momentum continues to move Arizona towards legalization of adult use within then next few years. We are one of the largest and best known brands in Arizona, which we believe positions us extremely well to capitalize on the growth opportunities in both the medical and adult markets, once the latter is legalized."

U.S. Expansion and Nevada Option:

With 29 states plus Washington D.C. currently having medical cannabis laws and 8 states having legalized adult use, market participants anticipate the U.S. cannabis market to grow from $4.6 billion in 2016 to around US$22 billion in 2020 (The State of Legal Marijuana Markets, 4th edition). The fragmented nature of the U.S. cannabis market creates a very significant opportunity for well capitalized early movers, such as BCC, to expand through acquisitions.

As part of the transaction, BCC has also acquired an option to purchase a controlling interest in GreenMart of Nevada, for US$9 million. GreenMart is a cultivation and wholesale business located in Las Vegas, Nevada. With 42 million visitors annually, Las Vegas is anticipated to become an important and high growth market following legalization of adult use. GreenMart carries the MPX brand, and has a production capacity of approximately 1.6 million grams per annum of dried flower and 85,000 grams of concentrate per annum. At current Nevada market prices, this would translate into approximately US$10.8 million in revenues per annum. The Company's option expires July 1st, 2018, which will provide BCC with substantial operational data to assess the continued attractiveness of the option. Additionally, the Company has obtained the first right of refusal on any license or operation owned or sourced by the sellers of the Arizona operations in Arizona, Maryland and other US states.

Mr. Boyes added, "The anticipated growth of the cannabis sector in the U.S., be it for medical or adult use, is tremendous. Smaller but ambitious operations that may lack access to capital and/or banking arrangements, are incentivized to team up with a financially strong partner, such as BCC, to pursue further growth. We have already identified a number of attractive opportunities to expand our footprint, including our option on GreenMart in Nevada. At the same time, we are actively assessing opportunities in other geographies. Our medium-term objective is to create a vertically integrated branded business across multiple US states."

The Consideration:

In consideration for the acquisition, the purchase price of US$25 million (~CA$32.9M) will be satisfied by a cash payment of US$15 million (~CA$19.7M), subject to adjustments, and a promissory note in the principal amount of US$10 million (~CA$13.1M), payable to the Sellers. The Promissory Note shall have a three (3) year term and bear interest at the rate of eight percent (8%) per annum, such interest being cumulative but not compounded.

Mr. Boyes continued, "This is a very attractively priced transaction, especially when comparing the Arizona business to its Canadian listed peers. The H4L and MPX brands each have a strong operational track record, generate substantial positive cash flow and have tremendous growth prospects, both in Arizona and in other geographies. Combined with BCC's access to capital, we are very excited to be able to accelerate our expansion strategy and believe we are very well positioned to become an important player in the cannabis space."

Further information in connection with the Transactions, including, the date and parties to the agreements, terms, details of the financing, etc. will be set out in the listing statement of BCC, which will be available for review on SEDAR and the CSE website under BCC's profile prior to the commencement of trading on the CSE.

US$27 Million Private Placement Completed:

Concurrent with the acquisition, the Company has completed a private placement for gross proceeds of US$27 million (CA$36.3 million), consisting of 181,683,101 Common Shares at a price of CA$0.20 per Common Share. The proceeds of this private placement were used to satisfy the US$15 million cash portion of the purchase price for the Arizona Business. The Company intends to use the remaining US$12 million (~CA$15.8M) of the gross proceeds to build out a new cultivation facility in Mesa, Arizona to support further acquisitions, and for general working capital.

The US$27m private placement was facilitated by London based Chrystal Capital Partners (www.chrystalcapital.com), and has brought in some influential funds and individuals to the shareholder register.

Following the placement, BCC has 223,632,654 common shares outstanding.



Canadian Securities Exchange Listing:

BCC is also pleased to announce that it has received conditional approval to list its shares for trading on the Canadian Securities Exchange (the "CSE"). Management anticipates receiving final approval within the next few days, with trading, under ticker symbol BCC, to commence three days after receipt of final approval. Per the Company's press release of January 13, 2017, shares of the Company were delisted from the TSX Venture exchange.

Existing shareholders of the Company need not take any action and their shares shall be normally tradeable on the CSE upon listing.

Canadian Operations:

In addition to its U.S. operations, BCC will continue to actively pursue its interests in the Canadian cannabis space. The Company leases a property in Owen Sound, Ontario, for which an application to Health Canada has been made for a cannabis production and sales license. As the Company progresses through the approval process, it intends completing the facility towards obtaining final approval and licensing.

Conference Call:

Management will discuss the acquisition and the prospects for the Company going forward in a conference call on Thursday, January 26. Details of this call will be communicated Wednesday, 25 January 2017.



About The Canadian Bioceutical Corporation:



BCC, an Ontario corporation, through its wholly owned subsidiaries in the U.S., provides management, staffing, procurement, advisory, financial, real estate rental, logistics and administrative services to two medicinal cannabis enterprises in Arizona. While the Company does not directly own, possess or sell cannabis or cannabis-infused products, it does provide substantial support and exerts considerable influence over these two businesses, which are legally authorized to sell medical cannabis and derivative products.



Under the Health for Life ("H4L") brand, the two licensed dispensaries operate in the Mesa area, which is part of the rapidly growing Phoenix Metropolitan Statistical Area (MSA) with a population of 4.6 million people. Additionally, the Company supports the Melting Point Extracts ("MPX") brand. The award winning MPX products have facilitated rapid growth of the brand's wholesale business, now supplying a growing number of Arizona dispensaries.



The Company also leases a property in Owen Sound, Ontario, for which an application to Health Canada has been made for a cannabis production and sales license. In addition, the Company will continue its efforts related to its legacy nutraceuticals business.



Cautionary Statement Regarding Forward-Looking Information:

This news release includes certain "forward-looking statements" under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, the Transaction and BCC's objectives and intentions. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause 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 and social uncertainties; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; those additional risks set out in BCC's public documents filed on SEDAR at www.sedar.com; and other matters discussed in this news release. Although BCC believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, BCC disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

On behalf of the Board of Directors

The Canadian Bioceuticals Corporation

Scott Boyes, CEO

For further information please contact:



Scott Boyes, President and CEO

The Canadian Bioceutical Corporation

[email protected]

www.canadianbioceutical.com

Marc Lakmaaker

NATIONAL Equicom

T: +1 416 848 1397

[email protected]

SOURCE: The Canadian Bioceutical Corporation