TORONTO (February 20, 2020) – PRESS RELEASE – FSD Pharma Inc. has announced the sale of its 12% equity interest in Cannara Biotech Inc. to a consortium of buyers for cash proceeds of more than $7.7 million.

The terms of the share sale transaction were negotiated at arm's length with a group of buyers that included entities controlled by members of the Cannara board and senior management. A substantial portion of FSD Pharma's shareholdings in Cannara were subject to a statutory escrow expiring December 2021. Under the terms of the share sale transaction, the buyers agreed to acquire FSD Pharma's interest subject to escrow and, as such, assumed all of the associated market risk. The share sale transaction represents a 670% return on the company's stake in Cannara.

"This is a very positive milestone for the shareholders and stakeholders of FSD Pharma to recognize a 7x return in less than two years," stated Raza Bokhari, MD, executive co-chairman and CEO. "This transaction represents, which I hope is the first of others that will follow to strengthen our cash position on the balance sheet. Our aim is to scale up to $50 million in disposable cash through monetizing our non-cash assets and raising new capital from institutional and institutional grade investors in the United States and elsewhere."

For further details on the share sale transaction, please refer to FSD Pharma's Early Warning Report, which will be available under Cannara's SEDAR profile at www.sedar.com.

Non-IFRS Measures

Gross margin percentage, before fair value impacts in cost of sales, a non-IFRS measure, is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.  This measure is calculated as net revenue less inventory production costs expensed to cost of sales, divided by net revenue, and may be computed from the consolidated statements of operations presented within this news release.

Adjusted EBITDA, a non-IFRS measure, is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as earnings before interest, tax, depreciation and amortization, share-based compensation expense, fair value changes and other non-cash items, and further adjusted to remove acquisition-related costs. The Company attributes Adjusted EBITDA to its operations and corporate overhead, strategic investments and business developments, and non-operating or under-utilized facilities. The Adjusted EBITDA reconciliation is presented within this news release and explained in Management's Discussion & Analysis under "Adjusted EBITDA (Non-IFRS Measure)", a copy of which will be filed on SEDAR.

Free Cash Flow, a non-IFRS measure, is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.  This measure is calculated as net cash provided by (used in) operating activities less purchases and deposits of property, plant and equipment.

Transition to U.S. GAAP Reporting

As part of our U.S. financial reporting requirements, Canopy Growth confirmed that, as of September 30, 2019, it no longer met the criteria for qualification as a foreign private issuer because (1) more than 50% of the outstanding voting securities are held by residents of the United States, and (2) the majority of Canopy Growth's directors are United States citizens.

Therefore, as of April 1, 2020 Canopy Growth will be considered a United States domestic issuer and a large accelerated filer. As a result of this change, as of April 1, 2020, Canopy Growth will be required to prepare its consolidated financial statements, including the Company's March 31, 2020 audited annual consolidated financial statements, in conformity with United States generally accounting principles, with such change being applied retrospectively. The extent of the impact of this change in accounting framework has not yet been quantified. Canopy Growth will also be required to provide an auditor attestation report under Section 404(b) of the Sarbanes-Oxley Act.

This press release is intended to be read in conjunction with the Company's Unaudited Condensed Interim Consolidated Financial Statements ("Financial Statements) and Management Discussion & Analysis ("MD&A) for the three and nine months ended December 31, 2019, which will be filed on SEDAR (www.sedar.com) and will be available at www.canopygrowth.com. The basis of financial reporting in the Financial Statements and MD&A is in thousands of Canadian dollars, unless otherwise indicated.

VANCOUVER, Feb. 20, 2020 /CNW/ - PRESS RELEASE - Cannara Biotech Inc. has announced a buying group which includes Javaa Private Equity Inc. has collectively acquired a total of 85,003,250 common shares from FSD/FV Pharma Inc., the  majority of which remain in escrow, stemming from Cannara's go-public transaction a year ago. This $7.7 million transaction ensures a smooth transition of approximately 12% of Cannara's issued and outstanding common shares.

Post transaction, FSD/FV Pharma holds no remaining interest in Cannara and Dr. Sara May, the president of FV Pharma Inc. will step down from the company's Board of Directors. The company is evaluating alternative independent directors and will fill the vacancy in a timely fashion.

"The buying group, a combination of insiders and independent, third party investors who understand Cannara's potential and the progress it has made since going public, are committed to the company's strategic plan of being a leader in Quebec's cannabis landscape," said Lennie Ryer, CFO of Cannara. "With last month's license granted from Health Canada, we are now poised to begin full cultivation operations at Phase 1 of the Farnham facility, with an annual capacity of 20,000 kgs of premium, indoor grown cannabis."

Following their acquisition of 8,161,626 common shares of Cannara in the transaction, Javaa now holds 242,167,820 common shares of Cannara representing approximately 34.3% of the issued and outstanding common shares. The shares of Cannara acquired by Javaa are held for investment purposes. Javaa may in the future purchase or sell shares of Cannara or otherwise trade in securities of or engage in other transactions with respect to Cannara depending on a number of factors, including but not limited to, Cannara's financial position, the price levels of the common shares of Cannara, conditions in the securities markets and general economic and industry conditions, Cannara's business or financial condition, and other factors and conditions Javaa deems appropriate.

For further information, a copy of the Early Warning Report to which this press release relates can be obtained from Cannara's SEDAR profile at www.sedar.com.