Pure Global Cannabis Inc. (PRCNF) Announces Transformational International Expansion Into Latin America

Pure Global Cannabis Inc. (TSX.V:PURE; OTC: PRCNF)  (the “Company” or “Pure Global“), a vertically-integrated, growth-oriented life sciences cannabis company, is pleased to announce that it has entered into a binding letter agreement (the “Agreement“) with Avicanna Inc. (“Avicanna“) to acquire a 60% interest in Avicanna’s Colombian subsidiary, Sativa Nativa S.A.S. (“Sativa Nativa“). In addition, Avicanna will also grant Pure Global an option to acquire an additional 15% in Sativa Nativa for an aggregate ownership of 75%.  Sativa Nativa has been issued a license for the cultivation of psychoactive cannabis and a license for the manufacture of cannabis derivatives by the Colombian Ministry of Justice and Ministry of Health.

Malay Panchal, President & CEO of Pure Global, stated: “This is an exciting day for Pure Global as we make our first entry into Latin America and kickstart our international growth plans. We have found an excellent partner in Avicanna, which has done a tremendous job building highly strategic relationships and assets in Colombia , as well as on-the-ground teams capable of executing our aggressive plans. Sativa Nativa is set to become our flagship international and equatorial asset, which we will leverage to produce low-cost inputs for value-added products destined for emerging export markets.”

Aras Azadian , CEO of Avicanna, commented: “In partnering with Pure Global, we have found a talented and like-minded team focused on bringing science-based innovations to the global cannabis marketplace. We look forward to combining resources and efforts with Mr. Panchal and his team to position Sativa Nativa as an industrial-scale, sustainable and economical producer of cannabinoids for international markets.”

Highlights of the Transaction

• International expansion for Pure Global into emerging Latin America cannabis hub
• Establish leading state-of-the-art greenhouses on 28 hectares of land, with further potential expansion available
• Industrial-scale production and low-cost cultivation – plans for 1 million square foot state-of-the-art greenhouse in Santa Marta, Colombia with advanced technologies and automation to produce several fold greater than traditional methods
• Competitive cost advantages of cultivation with an estimated cost per gram to be a fraction of Canadian licensed producers
• Strong partnership with Avicanna which has joint ventures with Grupo Daabon, the largest organic agricultural company in the world, along with admission into Johnson & Johnson Innovation’s JLABS life sciences incubator in Toronto, Canada
• Production capacity is for the cultivation of both high tetrahydrocannabinol (“THC”) content and cannabidiol (“CBD”) cannabis plants

Overview of Sativa Nativa S.A.S.

• Issued licenses for the cultivation of psychoactive and non-psychoactive cannabis and for the manufacture of cannabis derivatives by the Colombian Ministry of Justice and Ministry of Health
• Up to 28 hectares of land near Santa Marta, Colombia
• 100,000 square foot greenhouse currently under construction along with a 20,000 square foot GMP– Pure Global plans to build an additional 1 million square foot state-of-the-art greenhouse
• Strong low-cost workforce, access to private water wells, attractive energy costs and the micro-climate of the Sierra Nevada mountains ideal suited for cannabis cultivation
• Access to a comprehensive genetics program resulting in the registration of over 80 genetics and the largest characterized and registered genetic bank in Latin America

Transaction Details

Under the terms of the Agreement, Pure Global will pay C$8,000,000 in cash and C$10,900,000 of common shares in Pure Global (“Pure Global Shares“) for an aggregate purchase price of C$18,900,000 in exchange for a 60% interest in Sativa Nativa (the “Acquisition“). The Pure Global Shares will be issuable upon closing of the Acquisition and the price per Pure Global Share shall be calculated by reference to the 10-day volume weighted average price of the Pure Global Shares. Avicanna will also grant Pure Global an option to acquire an additional 15% in Sativa Nativa for an aggregate ownership of 75% of Sativa Nativa (the “Option“). The total exercise price of the Option is C$6,000,000 payable as follows: C$3,000,000 in cash and C$3,000,000 in Pure Global Shares. The deadline to exercise the Option is 24 months after execution of a definitive agreement in respect of the Acquisition to be entered into by the parties.

In connection with the Acquisition and the Option: (i) the parties will enter into a management agreement pursuant to which Avicanna Latam shall operate and manage Sativa Nativa and its licenses for a management fee payable by Sativa Nativa equal to 3.0% of gross revenue of Sativa Nativa per month and a monthly management fee to be determined by both parties based on a proportionate costs basis; (ii) Pure Global will be granted exclusivity for all cannabis-related items and worldwide export rights from Sativa Nativa; (iii) the parties will enter into a supply agreement pursuant to which Pure Global will be entitled to contract with Avicanna and/or Sativa Nativa for all products produced by Sativa Nativa at an agreed upon pricing formula; and (iv) Avicanna will grant Sativa Nativa and Pure Global access to extraction and processing facilities which will be at a reasonable cost to be determined by both parties.