TORONTO

,

June 1, 2021

/PRNewswire/ —

Heritage Cannabis Holdings Corp.

(CSE: CANN) (OTCQX: HERTF) (“Heritage” or the “Company”), is pleased to announce that it has entered into a non-binding letter of intent (the “Agreement”) to purchase all of the issued and outstanding common shares of California based Capna Intellectual/dba

Bloom Brands

(“Bloom”) in an all share transaction.

Under the terms of the Agreement, Bloom will receive approximately

USD$15 million

of Heritage common shares in two tranches. The first tranche of

USD$7.5 million

will be at a deemed value of CA$0.14 per Heritage share, followed by a second tranche of shares six months after closing at a deemed value of either the greater of CA$0.16 or a 15% discount to the 15-day VWAP. The Agreement also includes potential milestone payments of up to an additional

USD$17 million

of Heritage common shares contingent upon Bloom achieving certain financial targets over a twelve-month period. All shares issued as part of the Agreement will be subject to lock-up provisions and applicable statutory hold periods.

Bloom launched their recreational brands in

California

in 2016 upon cannabis legalization in the state. Since then, Bloom has built a scalable, asset-light business model with an award- winning portfolio of products. Bloom operates a hybrid business model where brands are owned in

California

and licensed to partners in

New Mexico

,

Oklahoma

,

Nevada

,

Arizona

, and

Washington

. This model allows for a cost effective and rapid new market launch to capture early shelf space. In addition to the distribution arrangement, Bloom also has 21.5% ownership in its partners in

New Mexico

and 20% ownership in

Oklahoma

both of which are license owners.

In fiscal 2020, Bloom’s accountant prepared financials reflected revenues of

USD$11.4 million

. They have consistently placed as a top 10 vape brand in

California’s

recreational market, is a top five vape brand in

Los Angeles

since 2017, and is the top vape brand in

New Mexico

. Bloom also recently won an award as the best concentrate in

Oklahoma

and have won the High Times award in

Northern California

and the Chalice Cup in

Southern California

.

Strategic Highlights

• 
  Accretive transaction exclusive of synergies or product expansion
  
• The average upfront payment represents a premium to both the recent financing and the Premium 5 acquisition in
  
  January 2021
  
  . As well, the addition of Bloom would double Heritage’s 2020 total fiscal revenues.
• 
  Immediately creates a revenue generating U.S. platform and solidifies U.S. cannabis strategy with distribution in seven states once Heritage’s
  
  Missouri
  
  transaction is operational.
  
• Heritage is targeting an initial distribution platform in up to nine states, along with all 10 Canadian provinces.
• 
  Access to over 2,000 retailers in the U.S. and
  
  Canada
  
  to cross-sell its product portfolio.
  
• With a combined portfolio of over 150 SKUs, Heritage has the ability to provide a strong product offering across a large population base.
• 
  The strength of the Bloom leadership team will be an invaluable asset for the Company’s U.S. platform
  
• In combination with the Merida relationship, acquiring a team that successfully navigated market launches in a number of U.S. states will be an important element for the U.S. strategy. The Bloom team will be key members of the leadership team managing the U.S. expansion.

“This transaction combines Heritage’s leading Canadian recreational and medical brand platform with a well established, widely distributed cannabis brand in the U.S., which are retailed in over 500 stores across

California

,

Nevada

,

New Mexico

,

Arizona

,

Washington

, and

Oklahoma

,” stated

David Schwede

, President of Heritage. “Heritage has been advancing its U.S. investment strategy while focusing on strong financial discipline, high growth opportunities, and solid execution of its growth strategy. Bloom brings with it a strong team with a wealth of U.S. experience, and as a combined entity, Heritage will be positioned as one the most widely distributed house of cannabis brands in

North America

“.

“We’ve built a very successful business model and brand platform with a presence in six states. The combined entity will benefit from having deep cannabis product knowledge in both

Canada

and the U.S. This merger allows us to escalate our growth to become one of the most widely distributed cannabis brands in

North America

. Bloom is rapidly expanding into new territories and our team is focussed on bringing more innovative products to new markets. Merging with Heritage will allow us to do that, and we are excited to take Bloom to the next level as part of the Heritage platform.” commented Vitaly Mekk, Founder of Bloom.

The transaction is expected to close by the end of July and is subject to customary closing conditions and applicable third party and regulatory approvals. There can be no assurance that the transaction will be completed on the terms set out herein or at all.

Share Issuance for Previously Announced Agreement with Merida


Recently, the Company issued 495,049 common shares (”

Common Shares

“) in the capital of the Company to Merida Capital Holdings LLC and its designees (”

Merida

“). The agreement between Merida and Heritage announced on

April 7, 2021

saw the two companies partnering to strategically expand Heritage’s product distribution in the U.S. The Common Shares are being issued in consideration for the definitive agreement signed between Heritage and Como Health LLC, doing business as 3Fifteen Primo Cannabis, previously announced on

May 4, 2021

. The shares are issued at a deemed price of

$0.1250

per Common Share and are subject to a statutory four month and one day hold period. The shares will be held in escrow by Heritage and released in accordance with the escrow terms agreed to between the parties.

Follow Heritage’s Purefarma,

Pura Vida

, Premium 5, Bloom and feelgood. brands on Instagram and Facebook for more information.

About Heritage Cannabis Holdings Corp.


Heritage is a leading cannabis products company operating two licensed manufacturing facilities in

Canada

and offering innovative products to both the medical and recreational legal cannabis markets in

Canada

and U.S.  The company has an extensive portfolio of high quality cannabis products under the brands Purefarma,

Pura Vida

, RAD, Premium 5, Bloom, feelgood

,

and ArthroCBD.

ON BEHALF OF THE BOARD OF DIRECTORS OF HERITAGE CANNABIS HOLDINGS CORP.

”

Clint Sharples

”

Clint Sharples


CEO

For more information contact:



Kelly Castledine


Tel: 647-660-2560


[email protected]

The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.

This press release contains certain “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information contained herein may include, but is not limited to, information relating to the proposed transaction and the completion thereof.

By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

An investment in securities of the Company is speculative and subject to several risks including, without limitation, the risks discussed under the heading “Risk Factors” in the Company’s annual information form for the financial year ended

October 31, 2020

dated

March 3, 2021

. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions. Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this notice.

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SOURCE Heritage Cannabis