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CAN (ON): MedReleaf purchases 1 million sq.ft. greenhouse

MedReleaf has entered into agreements to acquire 1 million square feet of existing greenhouse infrastructure on a 69 acre property in Exeter, Ontario and 95 acres of adjacent land for $21.5 million in cash and 225,083 common shares of MedReleaf. The existing Exeter Facility, after retrofitting, will have production capacity of up to 105,000 kilograms of cannabis product annually with a first harvest anticipated by the end of 2018, subject to receipt of a licence from Health Canada. The Exeter Facility will add large scale, low cost greenhouse production alongside MedReleaf's two Ontario-based premium indoor production facilities in Markham and Bradford, and, when fully operational, will increase the company's fully funded capacity to approximately 140,000 kilograms of cannabis product per year. In addition, the adjacent 95 acres of undeveloped land could accommodate a greenhouse approximately 1.5 times larger than the Exeter Facility, providing for future expansion of cultivation capacity well-beyond what is offered by the existing greenhouse.

"The addition of greenhouse production in concert with our two best-in-class indoor cultivation facilities will allow us to more rapidly expand capacity and to address the growing need for raw material inputs for extract and other non-flower related products from our premium and exclusive varieties. We also continue to scale our indoor production of high quality, award-winning, premium dried flower in order to serve the recreational and global medical markets," said Neil Closner, CEO of MedReleaf. "MedReleaf brings to this exciting project a proven track record of operational excellence and of continuous process and yield improvements at an industrial scale. With a complete portfolio of cultivation options, we will be better positioned to meet the growing demand for our industry-leading products and to continue to align our capital spend with emerging market opportunities."

Under the terms of the Agreements, MedReleaf will acquire 1 million square feet of existing greenhouse infrastructure situated on a 69 acre property in Exeter, Ontario and an additional 95 acres of undeveloped adjacent land. The value of the Agreements is approximately $26 million, consisting of $21.5 million in cash and 225,083 MedReleaf shares. The issuance of the MedReleaf shares remains subject to the approval of the TSX.

"This third Canadian facility will help to further diversify our risk across production sources and provide us with greater operational flexibility to scale in a manner that should enhance global profitability across our business. As we always have, we will add capacity incrementally and in a financially prudent manner that is in lockstep with forecasted global demand and through the ultimate lens of maximizing long term and sustainable return on invested capital", added Igor Gimelshtein, CFO of MedReleaf.

MedReleaf is fully funded to complete the retrofit of the Exeter Facility's existing one million square feet of greenhouse, a new processing building, general site infrastructure upgrades, and site security. The greenhouse retrofit will incorporate state-of-the-art environmental monitoring and control systems, supplemental lighting, advanced irrigation systems, and fully automated growing systems.

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Publication date: 2/27/2018



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