Cannasouth to Consolidate Operations

Leading medicinal cannabis company, Cannasouth Limited (NZX: CBD) ("Cannasouth" or "the Company") is pleased to announce it has today entered into two conditional agreements to acquire the balance of the stakes that it does not already own in its cultivation and manufacturing joint venture businesses. 1. Acquisition of outstanding interest in Cannasouth Cultivation Limited Cannasouth has entered into a conditional agreement with Aaron Craig and his family interests (Craig Family Interests) to acquire the remaining 50% stake in Joint Venture business Cannasouth Cultivation Limited that Cannasouth does not already own, for an aggregate purchase price of $3,540,000. 2. Acquisition of outstanding interest in Midwest Pharmaceutics NZ Limited Cannasouth has entered into a conditional agreement with Mark Balchin and Greenmeadows Health Limited ("Midwest Vendors") to acquire the remaining 40 per cent shareholding in Hawkes Bay-based Midwest Pharmaceutics NZ Limited (Midwest) that it does not already own, together with the shareholder loans made by the Midwest Vendors to Midwest for an aggregate purchase price of $1,026,000. CEO of Midwest, Mark Balchin, will continue as Chief Manufacturing Officer for the Group. Commercial Benefits of the Acquisitions o Take 100 per cent control of both joint venture cultivation and manufacturing businesses o Accelerate pathway to significant revenue generation o Improve operational efficiencies across the Group o Post-acquisition revenues and 100 per cent of future profits will be consolidated into the Cannasouth Group P&L o Opportunity to generate additional revenues from existing operations at Midwest while positioning the business for GMP certified medicinal cannabis manufacturing Cannasouth Proposes to undertake a Capital Raising to Fund the Acquisitions The Company is currently finalising its capital raising strategy and will release details to the market in due course. Please see attached Market Announcement for full details of the transaction. End CA:00375070 For:CBD Type:TRANSACT Time:2021-07-05 08:49:37