Cannabis One Holdings Inc. and ONE Cannabis Group to Combine, Forming the First US-Based Vertically Integrated Cannabis Franchise and Brand Company

Vancouver, British Columbia and Denver, Colorado--(Newsfile Corp. - December 10, 2019) - Cannabis One Holdings Inc. (CSE: CBIS) ("Cannabis One", "CBIS" or the "Company"), today announced that it has entered into a business combination agreement (the "Agreement") whereby its wholly-owned subsidiary, Cannabis One U.S., Inc. will combine with OCG, Inc. ("One Cannabis Group" or "ONE"), one of the first U.S. cannabis franchisors. ONE brings with it a disruptive dispensary franchise model operating under the distinct Unity Rd. brand. To date, there have been agreements signed for 15 Unity Rd. dispensary franchises across five states.

The combination of Cannabis One's "house of brands" business model with ONE's unique franchise offering will create a dominant, capital efficient dispensary model and vertical distribution for its brands.

"This Agreement brings together two Colorado born and bred companies that have been in the cannabis industry for over 10 years. CBIS's expertise in brand development and distribution has allowed it to create over 900 retail partners for its brands across four states. Together with ONE's franchise model, we are creating an EBITDA positive, highly focused company that has an ability to grow via the use of the national Unity Rd. franchisee network," said Jeff Mascio, chief executive officer of Cannabis One.

"Franchising is the most agile and proven way to scale in the cannabis industry," said Mike Weinberger, chief operating officer of One Cannabis Group, which began its franchise program in 2018. "Our franchisees own and operate their own dispensaries, hire locally and keep money in the communities they serve. The ongoing support and resources we provide allows them to scale more quickly than if they were operating independently. Cannabis One shares our vision of inspiring confidence in cannabis for all, and we look forward to working together and elevating our brands across North America and beyond."

Highlights of the Transaction

The Agreement is expected to result in a company that is strategically focused on growing its robust dispensary network and allowing its already solid brand portfolio to be distributed into franchise stores and retail partner locations alike.

• First True U.S. Cannabis Franchise Opportunity: ONE Cannabis has established itself as a first mover in the U.S. cannabis franchise space. Through the team's innate understanding of the franchise model, there have been agreements signed for 15 franchises in five states - Colorado, Illinois, Massachusetts, Missouri, and Ohio. This model sees franchisees pay a $USD 100,000 franchise fee upfront with 5 percent gross royalty on top-line revenue and a 2 percent marketing fee.

• Creates a Capital Efficient Model to Expand Retail Brands: The combined business will have the unique ability to drive revenue growth across its franchise locations and its distribution platform with limited capital expenditures required for future dispensary locations. This model allows the opportunity to have high capital efficiency as the combined business expands its national footprint.

• Creates a Sizeable Distribution Platform for In-House Brands: Through both its existing retail partner network of 900-plus dispensaries and its franchise platform, the combined company will have one of the strongest brand distribution platforms in cannabis with an ability to further develop brands through valuable data gained at its franchised and wholly-owned dispensaries.

• Highly Experienced Management Teams: This Agreement combines the operational execution of CBIS's team in aggregating, distributing and producing top-tier brands with ONE's decade of corporate cannabis experience and 30-plus years in franchising. ONE's team boasts 13 Cannabis Cup wins and previously developed and sold a 500-unit franchise business to MTY Food Group.

• Strong Economics and Demonstrated Cash Flow: The combined company expects to see solid revenue growth and to be EBITDA positive in 2020 through high-margin franchising, brand distribution and over 85,000 sq. ft. of indoor cultivation capacity.

Transaction Summary

The Agreement

Under the Agreement, Cannabis One will purchase all of the issued and outstanding shares of ONE (the "ONE Shares"), through its wholly-owned subsidiary, Cannabis One U.S., Inc., in exchange for Class B Super Voting common shares in the capital of Cannabis One ("CBIS Shares").

After giving effect to the Agreement, the holders of ONE Shares, will hold approximately 45 percent of CBIS's issued and outstanding shares on a pro forma basis and the existing shareholders of CBIS will hold approximately 55 percent of CBIS's issued and outstanding shares on a pro forma basis.

The Agreement is anticipated to close at the end of Q1 2020.

Complete details of the terms of the Agreement are set out in the Business Combination Agreement, which will be filed by Cannabis One and will be available for viewing under Cannabis One's profile at www.sedar.com.

About Cannabis One

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 Joint^TM, 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 Joint^TM 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.

About ONE Cannabis Group

ONE Cannabis Group is a Colorado-based, vertically integrated cannabis company that's making a name for itself as the bridge connecting the two previously disconnected worlds of cannabis and franchising. Across its brands, ONE covers several areas of cannabis-related business functions, including franchising, social equity, cultivation, consulting, real estate, retail operations and technology (point of sale). Its award-winning Green Man Cannabis is well-known for its connoisseur-grade craft cannabis and numerous Cannabis Cup wins. Recently, ONE Cannabis became the first cannabis business to earn a Franchise Times Dealmakers award - a recognition presented to the boldest players driving mergers and acquisitions in franchising. For more information, visit ocginc.com.

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. 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".

"EBITDA" (earnings before interest, tax, depreciation and amortization) margin does 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 measure of "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 "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.

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.

Further Information: For investment inquiries, please contact Scott Koyich, Investor Relations at Scott@briscocapital.com or (403) 619-2200.

Related Links

www.cannabisone.life

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