Akanda to Acquire Portugal-based Holigen, Securing a Cannabis Sector Leadership Position in Europe, the Middle East and Africa (EMEA) with EU GMP Market Access

Transformational deal will add prized cultivation, manufacturing and distribution assets to accelerate Akanda’s seed-to-patient model and satisfy demand in fast-growing European cannabis markets. Akanda will have immediate EU GMP certification, a significantly expanded product portfolio, and an award-winning genetics library

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LONDON–(BUSINESS WIRE)–International medical cannabis company Akanda Corp. (“Akanda” or the “Company”) (NASDAQ: AKAN) today announced it has entered into a definitive agreement to acquire 100% of the issued and outstanding shares of Holigen Limited (“Holigen”) from The Flowr Corporation (“Flowr”) (TSXV: FLWR, OTC: FLWPF). The proposed acquisition will significantly accelerate Akanda’s seed-to-patient business model in the EMEA region, improving the Company’s ability to meet growing demand for medical cannabis and positioning it for adult use markets as regulations evolve.

“The combination of Akanda and Holigen is an ideal synergistic opportunity for Holigen”

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The highly complementary acquisition of Holigen, the owner of a Portugal-based cultivator, manufacturer and distributor, provides Akanda with both the capacity and route-to-market for delivering first-party and third-party (“1P/3P”) EU Good Manufacturing Practice (GMP) certified medical cannabis to legal EU markets through an efficient vertically integrated model. Holigen’s wholly owned subsidiary RPK Biopharma Unipessoal, Lda (“RPK”), consists of a high-quality 20,000 square foot indoor EU GMP certified grow facility located near Lisbon (in Sintra) dedicated to the cultivation of high-THC premium cannabis as well as a large seven million square foot (180+ acres) outdoor facility located two hours south in Aljustrel. Combined, the Company believes these facilities will provide the flexibility of capacity in Portugal to produce two tonnes of 1P premium indoor cannabis, over 100 tonnes of 1P outdoor cannabis, and over eight tonnes of 3P manufacturing capacity annually.

Holigen’s prized purpose-built indoor grow facility is the only one of its kind that can produce EU GMP medical cannabis equivalent to the recreational grades available in North America. Pursuant to the terms of the acquisition, Akanda will also benefit from the genetics library available from Flowr, including its award-winning BC Pink Kush, BC Black Cherry and BC Strawnana as well as certain new exotic genetics that will be exported to Portugal from Canada. Holigen harvested approximately 300 kilograms of medical cannabis in the first quarter of 2022. Initial in-process testing for both genetics of medical cannabis are indicating high THC content levels of greater than 25%.

The European medical cannabis market has continued to grow as additional countries have updated their regulations to legalize the use of medical cannabis. Prohibition Partners estimates the medical market generated approximately US$382 million in 2022 and will reach US$2.5 billion by 2026¹.

Key Transaction Highlights and Benefits to Shareholders

• EU GMP certification achieved. The acquisition provides the Company with EU GMP certification, bolstering Akanda’s pharmaceutical credentials and opening direct international market access.
• Significant synergies. The acquisition brings together two international medical cannabis companies with assets complementary to Akanda’s operations in Africa and the UK, distribution networks, products, and capabilities, resulting in significant synergies and creating a powerful 1P/3P platform for accelerated growth, including the option to leverage existing Holigen infrastructure to process and release Bophelo flower, resulting in significant cost/time savings and higher margins.
• Enhanced cash flow generation. The addition of Holigen reduces Akanda’s immediate capital expenditure requirements and improves its margin profile, helping accelerate the Company’s path to positive free cash flow generation.
• Unmatched global cannabis leadership. Holigen will add to Akanda’s capabilities with advanced cultivation expertise that would be an asset to the global cultivation operations of the combined company. Tom Flow, an internationally recognized cultivation professional with over 18 years of experience across a range of grow operations, is expected to join Akanda, subject to agreement and board approval.
• Hyper-scalability in EMEA. Holigen would provide Akanda with significant asset scalability in the EU, while at the same time optimizing seasonality by having cultivation operations in both the northern and southern hemispheres, which is unique in the industry.
• Premium indoor cultivation. The Sintra facility is a 20,000 square foot premium indoor facility designed to produce at least two tonnes of high-THC premium medical cannabis per year. The facility is one of limited number of fully certified EU GMP indoor facilities currently operating in Europe.
• Large-scale outdoor cultivation. The Aljustrel facility is comprised of over seven million square feet of cultivation capacity and completed a successful outdoor grow over a 30-acre parcel of land – see here.
• Expanded B2B sales and services opportunities. While Holigen’s indoor facility can grow up to two tonnes of cannabis, it can also process over eight tonnes annually. This will expand opportunities for the processing of 3P cannabis products.
• Immediate B2C sales opportunities in the UK. Holigen’s product offering is expected to be in high demand in the burgeoning UK medical market and is planned to eventually be offered via Canmart, Akanda’s fully licensed importer and wholesaler operation in the UK.
• Potential for Portuguese market development. Akanda intends to pursue product distribution and B2C partnerships in Portugal, addressing currently unmet demand in the market.
• Expanded inventory and genetics portfolio. Today, Holigen has more than 300 kilograms of high-THC premium medical cannabis in current inventory, comprised of BC Black Cherry and BC Strawnana. Akanda will own Holigen’s award winning genetics library, consisting of over 40 strains known for their high THC terpene richness and vigor, which we plan to make available through the Akanda distribution model.
• European adult-use optionality. While Akanda’s business model is premised on existing global medical markets, multiple European companies are in the process of opening adult-use markets and the Company intends to supply these markets as they begin to open.

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