REPEAT - AgraFlora Closes Acquisition of Organic Flower’s Downstream and Product Formulation Asset Portfolio

Joint News Release

VANCOUVER, British Columbia, June 07, 2019 (GLOBE NEWSWIRE) -- Organic Flower Investments Group Inc. (CSE:SOW)(2K6.F)(QILFF) ("Organic Flower" or “OFIG” or the “Company”) is pleased to announce that the Company has completed a transaction relating to the sale of its downstream and product formulation portfolio (the “Assets”) to AgraFlora Organics International Inc. (CSE: AGRA) (PU31.F) (PUFXF)  (“AgraFlora”). Pursuant to the terms of an executed Asset Purchase and Sale Agreement (the “Agreement”), this transaction reunites 70 per cent of Agraflora’s joint venture entity, Propagation Services Canada’s (“PSC”) 2,200,000 square foot Delta Greenhouse Complex under a consolidated corporate umbrella.

Under the terms of the executed Agreement, AgraFlora will issue 1.15 common shares in the capital of AgraFlora for each one (1) issued and outstanding share of Organic Flower (the “Consideration Shares”). It is anticipated that the Consideration Shares will be distributed to the shareholders of Organic Flower upon formal establishment of a record date.

As per the terms of the executed Agreement, AgraFlora has acquired the following Assets from Organic Flower:

• 20% interest in the flagship 2,200,000 square foot Delta Greenhouse Complex;
• Exclusive trans-European distribution and GMP cannabis processing/finishing agreements comprised of 80,000 retail endpoints/pharmacies, spanning 16 countries; and,
• Array of domestic downstream/product formulation operations, comprised of:
  • Joint-Venture (“JV”) with one of North America’s largest manufacturer and distributor of chocolate and sugar confectionary products;
  • Exclusive partnership with a leading Toronto-based Brewhouse with planned output capacity of over 200,000 HL per annum, to formulate, manufacture and distribute cannabinoid-infused beverages; 
  • Canadian CBD cosmetics/topicals manufacturing company, equipped with a vertically integrated, farm-to-face model;
  • 76 acres of un-zoned agricultural land with 1,000 feet of river frontage in New Brunswick, including 17,500 square feet of commercial-grade facilities and 12 separate structures;
  • Health Canada awarded cannabis research licence and an Industrial Hemp License;
  • Exclusive North American contract manufacturing and distribution agreement with the world’s first professional sports team to introduce its own branded CBD-infused performance product line;
  • Strategic procurement, warehousing, domestic/international product registration and regulatory representation capabilities;
  • Exclusive cannabinoid-infused supply and distribution agreement with a premier Canadian Bottler;
  • Sole Canadian manufacturer and distributor of an innovative beverage dispensing cap technology- equipped with a proprietary cannabinoid delivery mechanism;
  • Proprietary manufacturing process and formulation catalogue for a Nicorette-inspired medicinal cannabinoid product line;
  • Canadian exclusive rights to a catalogue of cannabinoid-infused product formulations;
  • Exclusive rights to a portfolio of 57 registered trademarks in Canada for a diversified range of cannabis products and services; and,
  • Sub-licensing agreement exclusive sub-license to market and distribute patent-pending “THC overdose antidote”

With the reunification of Organic Flower’s 20 per cent interest in PSC under a consolidated corporate banner, AgraFlora’s interest in projected 2020-funded production from the Delta Greenhouse Complex is forecasted to be 175,000,000-grams of premium dried cannabis flower. AgraFlora’s low cost domestic cannabis production potential is further de-risked by a five year, 100,000,000-gram off-take agreement with ICC International Cannabis Corp. (CSE:WRLD.U)(8K51.F)(WLDCF) ("ICC"), as well as an 25,000,000-gram per annum off-take agreement with Namaste Technologies Inc. (TSXV:N.V)(M5BQ.F)(OTCQB: NXTTF); subject to approval of its cultivation and sales licences by Health Canada.

Projected cannabis production from the Delta Greenhouse Complex, coupled with a previously announced revenue sharing and distribution arrangement with ICC will afford AgraFlora the opportunity to capture significant cash flows at both the upstream and downstream layers of the cannabis value chain; realizing material exposure to both the wholesale and eventual retail distribution of dried cannabis into high-value European patient populations.

Brandon Boddy, Chairman, Chief Executive Officer and a Director of AgraFlora stated: “Our flagship Delta Greenhouse Complex is widely considered to be one of the most technically superior and environmentally friendly greenhouse operations on the planet. Complemented by service agreements with experienced, best in class greenhouse operators, coupled with an expedited cultivation infrastructure retrofit, as well as renewed guidance pertaining to the Q4 award of a cultivation licence from Health Canada, the Delta Greenhouse Complex is forecasted to generate the critical mass required in today's evolving landscape for Canadian cannabis producers.

As we prepare for the our inaugural harvest which is scheduled for the first quarter of 2020, Agraflora looks forward to the integration of Organic Flower’s unique domestic downstream asset portfolio, and will continue to aggressively execute on our business plan while maximizing shareholder value.

This is a watershed acquisition for AgraFlora, adding a broad portfolio of unique downstream cannabis assets in a variety of lucrative, high-margin verticals, all while increasing exposure to marketplaces primed for geometric growth, including the European Union. This truly is the penultimate step involved with elevating AgraFlora to a premier vertically integrated cannabis company.

The addition of Organic Flower’s Canadian assets under the ‘AgraFlora’ corporate flag will signal to the marketplace the emergence of a new Tier 1 Licenced Producer, as the industry progresses towards the next phase of global cannabis normalization.”

ABOUT AGRAFLORA ORGANICS INTERNATIONAL INC.

AgraFlora Organics International Inc. is a growth oriented and diversified company focused on the international cannabis industry. It owns an indoor cultivation operation in London, ON and is a joint venture partner in Propagation Service Canada and its large-scale 2,200,000 sq. ft. greenhouse complex in Delta, BC. The Company has a successful record of creating shareholder value and is actively pursuing other opportunities within the cannabis industry. For more information please visit: www.agraflora.com.

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