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 - Seite 2

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.

Tom Flow, Interim CEO of Flowr, has been in charge of running and managing Holigen since October 2021, and following the successful completion of the acquisition, is expected to stay on and continue running the operation. An accomplished business leader and recognized cultivation expert, Flow co-founded Flowr in 2016 and has served in roles including CEO, Chief Operating Officer, and President. Prior to Flowr, he was co-founder and Chief Operating Officer of MedReleaf Corp, a Canadian Licensed Producer which was sold to Aurora Cannabis for US$2.5 billion (C$3.2 billion). Flow sits on the board and advisory committees of several cannabis-related companies.