Avicanna Acquires Majority Interest in Colombian Cannabis Cultivator

PARTNERS WITH COLOMBIAN MULTIBILLION DOLLAR AGRICULTURAL COMPANY, DAABON; RECEIVES LEAD ORDER IN GOING PUBLIC FINANCING FROM DAABON

TORONTO, Aug.16, 2018 /CNW/ - Avicanna Inc. ("Avicanna" or the "Company") is pleased to announce it has acquired a sixty percent (60%) controlling interest in Santa Marta Golden Hemp S.A.S. ("SMGH"), a company that has been issued a full suite of medical cannabis licenses in Colombia. The other substantial holder in SMGH is controlled by El Grupo Daabon ("Daabon"), a global industrial scale organic agricultural company based in Colombia. Daabon has also committed to lead Avicanna's IPO financing and subscribe for up to 20% of the offering.

This acquisition represents a significant milestone for the cannabis industry, being the first in which a major multinational agricultural corporation has taken a position in a joint venture of this nature. Daabon and Avicanna will be combining resources and expertise including Avicanna's leadership in research and biotechnological developments in the cannabinoid sector and Daabon's global leadership within the agricultural industry of industrial scale organic cultivation, processing and distribution. Daabon has agreed to dedicate all of its cannabis activities through SMGH, allowing Avicanna to capitalize on Daabon's well established global roots in the agricultural industry.

The transaction contemplates: i) Avicanna's acquisition of a sixty percent (60%) controlling interest of the total issued and outstanding shares of SMGH and ii) the issuance of 1,477,818 of Avicanna common shares, equivalent to 11.2% of its total issued and outstanding common shares as at April 30, 2018.

Key highlights of the transaction:

• Best in class partnership and international vertical integration.
• The partnership will combine a top Canadian biotechnological company focusing on advancements in cannabinoid research and product development with a multi-billion dollar global organic agricultural enterprise.
• SMGH is situated on, and owns, a sixteen-hectare parcel of land on the Caribbean coast near Santa Marta.
• Access to sustainable, and environmentally responsible agricultural business and expertise with over 15,000 hectares certified for organic cultivation which will allow SMGH to scale operations significantly.
• Potential for the development of industrial scale extraction plant in line with Daabon's current palm oil processing plant, which has the largest capacity in the Americas to extract 1,200 tonnes of raw materials a day.
• Enhanced infrastructure, and access to duty-free zones controlled by Daabon paving the way for the development of a global distribution network.
• Distribution and global footprints of both organizations, including Avicanna's offices in four (4) countries and Daabon's offices in six (6) countries with sales in over twenty (20) countries worldwide.
• Anticipated API and final product sales, inclusive of Avicanna's skin care and medical cannabis products, which utilizes the research and product development carried out in MaRS and through research partnerships with the University of Toronto and University Health Network.

Daabon to place lead order in Avicanna's IPO Financing

Daabon, through its closely held corporate entity, has agreed to lead Avicanna's IPO financing round by taking up to 20% of the brokered private placement. Proceeds from the IPO financing will be used for Avicanna's R&D projects in Canada, clinical projects around the world, funding of infrastructure in its agricultural projects in Colombia, and the growth of commercialization and distribution channels in Latin America and Europe.

Stay Connected

For more information about Avicanna Inc. and Santa Marta Golden Hemp S.A.S., visit www.avicanna.com, call 1-647-243-5283, or email [email protected].

About Santa Marta Golden Hemp S.A.S.

SMGH is a federally licensed and vertically integrated cannabis company based in Santa Marta, Colombia. Utilizing ideal environmental conditions as well as local organic cultivation expertise, SMGH aims to be one of the largest and most sustainable cannabis cultivation projects in the world. As an Avicanna subsidiary, SMGH leverages the intellectual property and advanced scientific know-how of Avicanna's team to execute its business model which includes cultivation, extraction, manufacturing, analytical testing and commercialization of its final products. With the support of global organic leaders, Grupo Daabon, SMGH is dedicated to environmental preservation, SMGH will cultivate 100% sun grown certified organic cannabis. Implementing Good Agricultural Practices (G.A.P) and Good manufacturing Practices (G.M.P)

About El Grupo Daabon

The Grupo Daabon is a pioneer and leader in the production of sustainable and organic ingredients in South America with headquarters located in Santa Marta, Colombia. The family-owned company was founded in 1914 and has grown to become the largest organic agriculture company in South America, employing well over 3000 with operations across 4 continents and sales in over 20 countries. Its operations include cultivation, the largest palm oil refinery in the Americas, production of glycerin and bio-fuels, construction, port management and duty-free zones. Daabon is also a global leader in production of organic palm oil, bananas, coffee, and avocado with over 40 organic and sustainability certificates world-wide including rain forest alliance, the first palm oil company to be certified RSPO and has been awarded as most sustainable producer of palm oil in the world for the last several years by SPOTT.

About Avicanna

Avicanna Inc. is a biotechnology company focused on innovative product development and advanced clinical research in the medical cannabis industry and is currently headquartered in JLABS @ Toronto (Canada).  Capitalizing on the progressive development of its proprietary brands Pura Elements™ and Pura Earth™, Avicanna is focused on building an international distribution network through its vertically-integrated business model and strategic licensing models. Utilizing the experience of its senior scientists, executive board, and the support of its clinical and academic partners in the University of Toronto and the University Health Network, Avicanna strives to be at the forefront of advancements in the global medical cannabis industry. Avicanna is focused on providing cannabinoid-based therapies that are both clinically supported and medically-approved.

Forward Looking Statements

This news release contains certain "forward-looking information" within the meaning of applicable Canadian securities law. Forward-looking information is frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or information that certain events or conditions "may" or "will" occur. This information is only a prediction. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking information throughout this news release. Forward-looking information includes, but is not limited to: (i) the ability to consummate transactions which are currently in discussions, (ii) the continuation of current climate and weather conditions in Colombia which are optimal for cannabis cultivation, (iii) requirements to obtain additional financing, (iv) timeliness of government approvals for granting of permits and licenses, including licenses to cultivate cannabis, (v) completion of local growing facilities, where applicable, (vi) actual operating performance of the facilities, (vii) regulatory or political change in Colombia, Latin America, or Canada, (viii) competition and other risks affecting Avicanna and Sativa Nativa S.A.S., in particular, and the medical cannabis industry generally. Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Avicanna is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

SOURCE Avicanna Inc.

For further information: about Avicanna Inc. and Santa Marta Golden Hemp S.A.S., visit www.avicanna.com, call 1-647-243-5283, or email [email protected]