Flower One Secures US $ 39 Million Term Loan, Including Option to Enter Buy-Sell-Lease for Flagship Nevada Facility

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Transaction establishes strategic partnership with cannabis industry leader, Subversive Real Estate Acquisition REIT LP

TORONTO, October 7, 2020 / CNW / – Flower One Holdings Inc. (“Flower One” or the “Company”) (CSE: FONE) (OTCQX: FLOOF) (FSE: F11) today announced that the Company has entered into a loan agreement to term (the “Loan Agreement”) for $ 39 million with Subversive Real Estate Acquisition REIT LP (“Subversive REIT”). As part of the loan agreement, Flower One granted Subversive REIT a two-year option to continue a sale-leaseback transaction (the “Sale-Leaseback Option”) to purchase the grow facility. and cannabis production of 455,000 square feet of Flower One at North Las Vegas, Nevada up to $ 80 million, and subsequently rent it to the Company.

“Subversive REIT is positioned to be a leader in the US cannabis real estate market,” said Ken villazor, President and CEO of Flower One. “We are thrilled to have this opportunity to build a strategic partnership with such a deeply connected and very knowledgeable cannabis real estate partner who is poised to benefit Flower One both in the short and long term as we continue. to improve our operations in Nevada. “

Also commenting on the transaction, Richard acosta, CEO and General Partner of Subversive REIT, said: “Subversive REIT was founded with a mandate to provide real estate capital solutions to major US cannabis operators. Entering into a loan agreement and potential sale-leaseback with Flower One fulfills this mission and then some. The state of Nevada and Las Vegas in particular, are important markets for cannabis brands, and Flower One operates the dominant cannabis cultivation and production asset in the state, making this investment an ideal opportunity for Subversive REIT while supporting the continued growth of Flower One. “

The loan agreement is for a seven-year interest-only loan at a rate of 10.5% for the term of the loan. The loan proceeds will be used to replace a $ 30 million term loan that would have been due in June 2021, as well as to finance general corporate objectives and other debt obligations of the Company. The transaction should be completed before October 30, 2020 and is subject to customary closing conditions.

The sale-leaseback option is structured as a sale-leaseback with a term of 20 years and two 10-year extension options. The value of the transaction should be between US $ 70 million and $ 80 million based on the achievement by the Company of certain financial performance thresholds during the two-year option period. The proceeds of the sale would first be used to reimburse the $ 39 million term loan. If agreed, both parties may also choose to execute the sale-leaseback after one year for a minimum transaction value of US $ 70 million.

The sale-leaseback option will also require the Company to issue warrants equal to 10% of the transaction price upon execution of the sale-leaseback. Each warrant will allow Subversive REIT to acquire one common share in the capital of the Company at an exercise price of 125% of the closing price of the common shares on the CSE on the trading day immediately preceding the closing of the sale. lease, but not less than CA $ 0.61 within five years of the execution of the sale-leaseback, subject to adjustments in certain customary events. The warrants will provide for customary anti-dilution adjustments to protect their economic value, including transactions in the Company’s securities such as stock splits or consolidations, reclassifications, non-monetary distributions and consolidation transactions. ‘companies.

No securities regulatory authority has approved or disapproved of the contents of this press release. The Warrants have not been and will not be registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or any state securities law. Consequently, the securities described herein may not be offered or sold in the United States“or to or on behalf of or for the benefit of a person in United States“or a” US person “(as those terms are defined in Regulation S under the US Securities Act) unless registered under the US Securities Act and applicable state securities laws or under exemptions from US Securities Act and applicable state registration requirements. This press release does not constitute an offer to sell or a solicitation of an offer to buy securities of Flower One in any jurisdiction in which such offer, solicitation or sale would be illegal.

About Flower One Holdings Inc.

Flower One is the largest full-service cannabis grower, producer and brand delivery partner in the state of Nevada. By combining over 20 years of greenhouse operational excellence with top cannabis operators, Flower One is delivering consistent, reliable and scalable processing to a growing number of industry-leading cannabis brands. Flower One’s 400,000-square-foot flagship greenhouse and 55,000-square-foot production facility are used for large-scale cannabis cultivation, processing and manufacturing. Flower One also operates a second facility at North Las Vegas with 25,000 square feet of indoor cultivation and production capacity. Flower One produces a wide range of products from wholesale flowers, full spectrum oils and distillates to finished consumer packaged products, including flowers, pre-rolls, concentrates, edibles and topicals for brands. the best performing cannabis. The common shares of the Company are traded on the Canadian Stock Exchange under the symbol of the Company “FONE”, in United States on the OTCQX Best Market under the symbol “FLOOF” and on the Frankfurt Stock Exchange under the symbol “F11”. For more information visit: https://flowerone.com.

Forward-looking statements

Statements in this press release that are not statements of historical or current fact constitute “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of United States securities laws (collectively, “forward-looking statements”). These forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the Company to differ materially from historical results or from any future actual results expressed or implied by these forward-looking statements. In addition to statements which explicitly describe these risks and uncertainties, readers are encouraged to consider statements labeled with the terms “belief”, “belief”, “expect”, “intends to”, “anticipate” , “Possible”, “should”, “may”, “will”, “plans”, “continue” or other similar expressions to be uncertain and forward-looking.

Forward-looking statements may include, but are not limited to, statements relating to the ability of the Company to complete the transactions contemplated under the loan agreement or the sale-leaseback option; the Nevada Marlet; the Company’s leadership as a full-service grower, producer, innovator and brand fulfillment partner; the Company’s ability to provide consistent, reliable and scalable processing to a growing number of leading partner brands; and the production of a wide range of products for the best performing brands in the country.

The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational and medicinal cannabis markets in United States through its subsidiary Cana Nevada Corp. The laws of the local states where Cana Nevada Corp. carries out its activities authorizes such activities; however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company’s business is contained under the heading “Risk Factors” in the Company’s Annual Information Form dated 23 june 2020 (the “Annual Information Form”) filed on its Issuer Profile on SEDAR at www.sedar.com.

The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement, the “Caution Regarding Forward-Looking Information” section contained in the Annual Information Form. All forward-looking statements contained in this press release are made as of the date of this press release. The forward-looking statements contained in this document are also subject to assumptions, risks and uncertainties which are described from time to time in public documents filed by the Company with the Canadian securities commissions, including the annual information form of the Company. Society.

Although Flower One has attempted to identify material factors which could cause actual results, performance or achievements to differ materially from those contained in forward-looking statements, there may be other factors which may cause actual results to differ materially from those contained in forward-looking statements, there may be other factors which may cause that the results, performance or achievement are not as expected, estimated or expected, including, but not limited to: reliance on obtaining regulatory approvals; invest in target businesses or projects that are engaged in activities currently considered illegal under United States federal law; changes in laws; limited operating history; dependence on management; additional financing needs; competetion; hamper market growth and state adoption due to inconsistent public opinion and perception of the medical and adult marijuana industry and; regulatory or policy change.

Therefore, readers should not place undue reliance on forward-looking statements. The forward-looking statements contained in this press release are made as of the date of this press release. Flower One Holdings disclaims and assumes no intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

NEITHER THE CANADIAN SECURITIES EXCHANGE NOR THEIR REGULATORY SERVICE PROVIDER HAS REVIEWED OR ACCEPTED RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS COMMUNICATION.

SOURCE Flower One Holdings Inc.

For further information: Contacts: Flower One, Ken Villazor, President and CEO, (416) 200-7641; Investor Relations, Canada, NATIONAL Public Relations, (416) 848-9835; United States, ADDO Investor Relations, (310) 829-5400, [email protected]

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