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Toronto, Ontario – Lineage Grow Company Ltd. (the “Company” or “Lineage”) (CSE:BUDD) is pleased to announce that it has entered into an agreement under agreed term sheet (the “Agreement”) to acquire California-based Walnut Oaks, LLC d/b/a Agris Farms (“Agris Farms”) (the “Transaction”). Agris Farms operates a premium quality craft cannabis cultivation facility in Northern California.

Transaction Overview

Agris Farms operates a fully-licensed and fully-operational 40,500 sq. ft. ultra-low-cost greenhouse facility and a 3,000 sq. ft. craft-style indoor facility in Yolo County, California (the “Yolo Grow”). The Yolo Grow is in commercial production with annual production capacity of 6,000 lbs. of premium quality craft cannabis.

Under this agreement in a separate company, the principals of Agris Farms are developing a 55,000 sq. ft. state-of-the-art integrated indoor cultivation and extraction facility in Sacramento California (the “Sacramento Project”). The Sacramento Project has a Conditional Use Permit (“CUP”) pending, currently under review by the City of Sacramento and will provide an additional 25,000 sq. ft. of craft-style indoor canopy as well as 10,000 sq. ft. of production space dedicated to manufacturing high-margin concentrate and branded products. In connection with the Transaction, Lineage will have an option to acquire the Sacramento Project.

The assets acquired in the Transaction will provide Lineage with the in-house cultivation capability to achieve a vertically integrated model in California as the Company is also working towards completing the previously announced acquisition of Lucrum Enterprises Inc., d/b/a LUX Cannabis Dispensary which operates one of San Jose’s sixteen licensed dispensaries.

Management Commentary

Peter Bilodeau, CEO of Lineage, commented – “This acquisition is transformative for Lineage and will provide the Company with foundational assets to execute on our California expansion strategy. We’ve examined multiple opportunities to establish craft cultivation capabilities in California, and Agris Farms stood out with their proven ability to deliver a premium quality craft product on a commercial scale. We look forward to working with Agris Farms to leverage their management, operations, and know-how as we seek to further penetrate the California market.”

Menna Tesfasion, CEO and founder of Agris Farms, commented – “We’re excited by this partnership with Lineage, a company we view as having tremendous growth opportunities in California and beyond. This transaction will enable Agris Farms to capitalize on its first-mover advantage as a leading fully-compliant craft cannabis cultivator in California.”

Transaction Details

Pursuant to the Agreement, Lineage will acquire a 51% interest in Agris Farms based on an implied enterprise value of USD $6,600,000. Consideration for the Transaction will be in the form of stock and the assumption of liabilities. Lineage will have an option to acquire the remaining 49% of Agris Farms within 6-months from closing for stock consideration.

Lineage will also have an option to acquire the Sacramento Project, within 6 months of closing or upon issuance of the Sacramento CUP, for stock consideration of USD $2.4 million.

Further transaction details will be disclosed upon completion of a definitive agreement.

The above Transactions are subject to a number of conditions, including but not limited to, final due diligence by the respective parties, execution of a definitive acquisition agreement which shall supersede the Agreement, receipt of applicable corporate approvals, and other regulatory and/or governmental approval. There can be no assurance that the Transactions will be completed as proposed or at all.

FMI Capital Advisory Inc. is acting as exclusive financial advisor to Lineage in connection with the Transactions.