Zenabis Announces Receipt of Industrial Hemp Production License and Other Licensing Updates

Hemp to be Cultivated for Cannabidiol (“CBD”) Production

VANCOUVER, June 3, 2019 /CNW/ – Zenabis Global Inc. (TSX:ZENA(“Zenabis” or the “Company“) today announced that Health Canada has granted an industrial hemp production license.

Industrial Hemp Production License

“This is the second cultivation license we have received from Health Canada this year, and is another important step toward realizing our vision of becoming a significant cannabis and cannabinoid producer in Canada,” said Andrew Grieve, Chief Executive Officer of Zenabis. “This license enables the commencement of hemp cultivation and hemp-derived CBD production, and also the testing of our vertical farming system at Zenabis Langley for the cultivation of hemp. This vertical farming system is intended to be used for the production of cannabis upon receipt of the Zenabis Langley cannabis cultivation license. The hemp-derived CBD market is expected to grow exponentially over the next three years.1 Through this addition, among other strategic hemp-focused initiatives, we are positioning Zenabis to participate in the hemp-derived CBD industry in both Canada and the United States.”

Zenabis will be able to cultivate hemp using the remaining land and in greenhouses off-cycle from other crops for its Zenabis Langley, Zenabis Pitt Meadows, and Zenabis Aldergrove facilities.2 Hemp cultivation at the Zenabis Langley site will not interfere with the planned cannabis cultivation activities at Zenabis Langley, nor will it reduce the cannabis cultivation design capacity of Zenabis Langley.

SiteOff-Cycle Greenhouse AvailabilityRemaining Land2
Zenabis LangleyNil3 acres
Zenabis Aldergrove453,000 sq. ft.20+ acres
Zenabis Pitt Meadows218,000 sq. ft.10+ acres

Cultivation of industrial hemp has been permitted in Canada since 1998 and is currently regulated by Health Canada under the Cannabis Act. Health Canada licenses the cultivation of hemp jointly under the Industrial Hemp Regulations and the Cannabis Act.

Under the Industrial Hemp Regulations, there are no restrictions to the location where industrial hemp may be cultivated. As a license holder for industrial hemp cultivation, Zenabis is authorized to cultivate at any site that it owns, and potentially at other facilities with the express permission from the owner of said facility.

The Government of Canada has been regulating adult-use recreational cannabis since its legalization on October 17, 2018. The Canadian Food Inspection Agency (CFIA) administers a number of acts and regulations that relate broadly to the import, production and use of plants. These requirements also apply to cannabis, industrial hemp, cannabis products and by-products, such as regulations for livestock feed and the disposal of unused plant parts.

In December 2018, the U.S. Farm Bill legalized hemp-derived CBD.3 In 2018, the U.S. hemp-derived CBD market was $390 million, and is expected to reach $1.3 billion by 2022.4

Licensing Update – Zenabis Atholville

On June 4, 2019, Zenabis is submitting the license amendment to Health Canada to commence cannabis production in its Phase 2C expansion project, which will expand the facility’s annual design capacity by 12,000 kg. Upon license amendment approval from Health Canada, Zenabis Atholville will be fully licensed, reaching its full annualized design capacity of 34,300 kg.

________________________
1 J.J. McCoy. New Frontier Data. ‘U.S. Hemp CBD Market to Triple by 2022.’
2 The remaining land is subject to availability and intent. Portions of the remaining land presented may require conversion to be suitable for cultivation. Total remaining land presented is the total potential outdoor hemp cultivation footprint.
3 Jeff Stein. The Washington Post. ‘Congress just passed an $867 billion farm bill. Here’s what’s in it.’
4 J.J. McCoy. ‘U.S. Hemp CBD Market to Triple by 2022.’

Zen Craft Grow

Zenabis has signed two exclusive, definitive cannabis supply agreements under its Zen Craft Grow program, bringing the total number of exclusive, definitive supply agreements to three. Through the Zen Craft Grow program, Zenabis supports cannabis micro-cultivators across Canada in the final stages of the Health Canada licensing process. Through these partnerships, Zenabis will bring unique genetics and small-batch, artisanally grown cannabis to discerning adult-use consumers across Canada.

About Zenabis

Zenabis is a significant Canadian licensed cannabis cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta, Aldergrove, Pitt Meadows and Langley, British Columbia; and Stellarton, Nova Scotia. In addition to gaining technologically advanced knowledge of plant propagation, the recent addition of state-of-the-art greenhouses in Langley, Pitt Meadows and Aldergrove provides Zenabis with 3.5 million square feet of facility space that can, upon full conversion, be dedicated to cannabis production.

If all facility space at Zenabis Atholville, Zenabis Stellarton, Zenabis Delta and Zenabis Langley is fully converted and dedicated to production, Zenabis will own, and have access to 660,000 square feet of high quality indoor cannabis production space, as well as 2.1 million square feet of greenhouse cannabis production space at its Langley facility, with this production strategically positioned on Canada’s coasts. Zenabis expects these facilities to have an annual design capacity of 131,300 kg of dried cannabis by the third quarter of 2019. These facilities, if fully built out and converted for cannabis production, would have an annual design capacity to yield approximately 479,300 kg of dried cannabis annually, for both national and international market distribution. An additional 700,000 square feet of greenhouse space will be used to continue the existing propagation business and produce industrial hemp, and can be converted to cannabis production at such a time that is beneficial to the strategic position of the Company. The Zenabis brand name is used in the cannabis medical market, while the Namaste and Blazery brand names are used in the cannabis adult-use recreational market, and the True Büch brand name is used for Zenabis’ kombucha products.

Forward Looking Information

This news release contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information may include, among others, statements regarding the future plans, costs, objectives or performance of Zenabis, or the assumptions underlying any of the foregoing. In this news release, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. In this news release, forward-looking statements relate, among other things, to: current plans for the cultivation of hemp and related hemp-derived CBD activities under existing and pending licenses; industry projections of the hemp-derived CBD market; the projected kilogram yield of recently licensed facility space and facility space under, or scheduled for, construction, the expected timing and completion of current and planned conversion, expansion and optimization of our facilities, the licensing of our facilities and projected timing thereof; the adequacy of our financial resources to achieve the conversion and expansion of our facilities, the submission of the Phase 2C license; the timelines projected for our internal post-processing capacities; and the expected timing and content of future operational updates. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward-looking information will transpire or occur. Forward-looking information is based on information available at the time and/or management’s good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Zenabis’ control. These risks, uncertainties and assumptions include, but are not limited to, those described in the shelf prospectus dated April 9, 2019, a copy of which is available on SEDAR at www.sedar.com and could cause actual events or results to differ materially from those projected in any forward-looking statements. Furthermore, any forward-looking information with respect to available space for cannabis production is subject to the qualification that management of Zenabis may decide not to use all available space for cannabis production, and the assumptions that any construction or conversion would not be cost prohibitive, required permits will be obtained and the labour, materials and equipment necessary to complete such construction or conversion will be available. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Zenabis does not intend, nor undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws.

For more information, visit: https://www.zenabis.com.

SOURCE Zenabis Global Inc.

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