Lineage To Acquire Harborside’s Iconic California Dispensaries And Cultivation Campus

 Creating California’s Premier Vertically Integrated Cannabis Company

CALIFORNIA: Lineage Grow Company and FLRish, a California corporation d/b/a Harborside, have entered into a binding letter agreement that will result in, among other things, Lineage acquiring all of the issued and outstanding securities of Harborside on a debt free basis in exchange for newly issued common shares of Lineage valued at approximately $200 million, according to a company press release.  Harborside operates two flagship dispensaries in the Bay Area, a cultivation facility in Salinas, California, and owns the Harborside brand. The Transaction will provide access to capital required to facilitate Harborside’s expansion plans in California and the contiguous western states. All references to dollar amounts in this press release are to Canadian dollars.

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Under the terms of the Transaction, 100% of the outstanding securities of Harborside shall be exchanged for Lineage securities. The deemed price per Lineage Share issued to Harborside securityholders shall be $0.165, and the final number of Lineage Shares issued in exchange for the outstanding Harborside securities shall be determined at the time the Transaction closes and will be subject to adjustments based on the anticipated Harborside securities offering and additional near-term acquisitions.

Following completion of the Transaction, current shareholders of Harborside are anticipated to hold in excess of 80% of the common shares of Lineage upon completion of the Transaction (the “Resulting Issuer”). The Resulting Issuer is expected to operate under the name “Harborside, Inc.” The Transaction will be a “fundamental change” under the policies of Canadian Securities Exchange (the “CSE”).  Lineage will file an application to the CSE to approve the Transaction and for the Resulting Issuer to continue trading on the CSE.  Lineage will be calling a special meeting of shareholders to approve the Transaction and related matters and will be filing a management information circular containing disclosure on Harborside, Lineage, the Resulting Issuer and the Transaction which will be provided to the Lineage shareholders prior to the shareholders’ meeting.

Trading in Lineage Shares has been halted because of this announcement and will remain halted until the resumption of trading is approved by the CSE. Assuming the satisfaction of customary closing conditions, including the approval of Harborside and Lineage shareholders and approval by the CSE, the Transaction is expected to close and trading is anticipated to resume in the fourth quarter of this year. When completed, the Transaction will constitute a fundamental change of Lineage (as such term is defined by the CSE). FMI Capital Advisory Inc. (“FMICA”) is acting as exclusive financial advisor to Harborside and Lineage in connection with the Transaction.

Completion of the Transaction will be subject to satisfaction or waiver of terms and conditions, customary or otherwise, including but not limited to satisfactory completion of due diligence, execution of a definitive agreement and all required approvals and consents, including the approval of the CSE and shareholders of Lineage.

Convertible Debenture Financing

Harborside intends to complete a convertible debenture financing (“Convertible Debenture Financing”) prior to the closing of the Transaction, for gross proceeds of CAD $20 million. The funds raised will be used for capital expenditures at Harborside’s cultivation campus in Salinas, CA, development of Harborside’s retail management services business segment, general corporate expenses, working capital, and a loan to Lineage to assist with completion of its previously announced acquisitions pending closing of this “Transaction”.

Management Commentary

Steve DeAngelo, Chairman Emeritus and Co-Founder of Harborside, commented, “I founded Harborside with dress wedding in 2006 to provide a gold standard of medical cannabis retailing; to serve patients with the most attractive facilities, highest levels of care, and best product knowledge in the industry; and to offer and produce safe, innovative and effective products that improve the quality of our customers’ lives. We hoped to demonstrate cannabis can bring benefits to communities instead of harm, to encourage further reform, and in time provide an unrivaled and trusted experience in an adult use market. That time has now arrived, so I am delighted to see Harborside merging with Lineage, which will allow us to access the Canadian capital markets, position Harborside for unparalleled growth and opportunity, and bring our gold standard approach and branded products to more communities and greater numbers of consumers.”

Lineage’s chief executive officer Peter Bilodeau, who will assume the role of Chairman of the Board of Directors of the Resulting Issuer, commented, “We are very excited to be joining forces with Harborside, one of the most iconic and longstanding brands in the cannabis industry, which positions the resulting company extremely well for future growth. After the Transaction, the company will have access to the necessary resources to fulfill our combined vision for  California’s most trusted, vertically-integrated cannabis company focused on high margin retail and branded product sales channels.”

Harborside’s Chief Executive Officer, Andrew Berman, who will serve as Chief Executive Officer of the Resulting Issuer following the Transaction, added, “This combination with Lineage will establish a platform for Harborside to continue expansion of its retail program and vertically-integrated, California-centric business model. Concurrently with this announcement, Harborside is issuing convertible debentures to raise approximately CAD $20m of new funds prior to the Transaction, enabling us to continue executing on our expansion plans as we move through the Transaction documentation and approval processes. These are tremendously exciting times for the company, our staff and the industry. As the fully regulated California market unfolds, we see strong growth in consumer demand and in the area of branded products, a market in which the Harborside and Key brands are market leaders and very well positioned.”

FMICA Chairman Adam Szweras, added, “We are very pleased to see this transaction moving forward and believe it accretes significant value for all parties involved. Harborside is a natural fit with Lineage given the companies’ shared focus on the California cannabis market and specifically high value segments within it such as retail and branded products. We look forward to facilitating the execution of the transaction and playing a role in defining the resulting company’s strategy going forward.”