TerrAscend Announces the Acquisition of Ilera Healthcare

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TORONTO, Aug. 2, 2019 /CNW/ PRESS RELEASE – TerrAscend Corp., the first and only global
cannabis company licensed for sales in Canada, the US, and the EU, today
announced the signing of a definitive agreement to acquire Ilera Healthcare, one of five vertically-integrated cannabis cultivator,
processor, and dispensary operators in Pennsylvania, with such
vertically-integrated licenses also referred to as « Super Licenses »
in the state.

Ilera’s cultivation and processing facility in Waterfall, PA includes a
genetic library of over 170 cannabis strains, a state-of-the-art greenhouse
designed for optimal plant growth and minimal environmental impact, clean CO2
and ethanol extraction capabilities, and leading-edge packaging technology.
Ilera’s dispensary in Plymouth Meeting, PA was designed to create a welcoming,
safe, and secure environment for patients. In the next six months, the company
expects to open two additional dispensaries in Region 1, which includes
Lancaster, Philadelphia, Chester, Bucks, Berks, Delaware and Schuylkill
counties. In addition to selling its products in its own dispensary, Ilera
distributes its dried flower, concentrates, tinctures, and topicals to 50 of
Pennsylvania’s 52 medical cannabis dispensaries.

TerrAscend has agreed to acquire 100% of the equity of Ilera for total
consideration of between US$125-$225 million, paid in a combination of cash and
TerrAscend shares. On closing, TerrAscend will pay to the sellers US$25 million
in cash, subject to customary closing adjustments, and an additional US$25
million worth of proportionate voting shares in the equity of TerrAscend
equivalent to approximately 5,059.102 proportionate voting shares (which are
each exchangeable for 1,000 TerrAscend common shares, being issued at an
issuance price of US$ 4.94 per share, based on the 45 day volume-weighted
average trading price of TerrAscend’s common shares as of Monday, July 29, 2019
of C$6.5307 and an exchange rate of C$1.3216 per US$1.00). Additional cash
consideration of up to US$175 million2 in aggregate may be paid
to the sellers based on Ilera achieving certain specified revenue and
profitability targets, with staged payments being made in 2020 and 2021. The
transaction is expected to close in the 4th quarter of 2019, subject
to regulatory approvals by the Pennsylvania Department of Health as well as
certain customary closing conditions. 

TerrAscend reiterates its current 2019 guidance of revenue in excess of
CAD$135 million on its current business, which does not contemplate
contribution from the Ilera transaction. The Company looks forward to giving
updated 2019 revenue guidance in the coming weeks, which will include projections
for Ilera’s sales contribution post the transaction’s targeted close in the 4th

Ilera’s senior operating team – including CEO Greg Rochlin, Director of
Cultivation Andrew Sack, and Chief Scientific Officer Oludare Odumosu– will
continue in management positions and are expected to work within the broader
TerrAscend organization. All the employees at the company’s Waterfall
cultivation and manufacturing site and their Plymouth Meeting dispensary site
are expected to join TerrAscend’s rapidly expanding US operations. Ilera is
currently the second largest employer in Waterfall, PA.

« Today’s news marks another important step forward in our U.S.
expansion strategy, » said Matthew Johnson, President of TerrAscend Corp.,
and TerrAscend USA, Inc. « Greg Rochlin and the rest of the Ilera team have
built a substantial business that delivers high quality, safe, efficacious
medicine to patients through scientific innovation, operational integrity, and
best-in-class patient education and service. Their team brings robust operating
experience and scientific knowledge that will be invaluable as we scale our
business in the U.S. and beyond. We see great potential in bringing Ilera
brands and formulations to the other jurisdictions in which we operate. We also
plan on launching California-born Valhalla Confections and State Flower brands
and our leading premium Canadian cannabis brand, Haven St. into the
Pennsylvania market. We are thrilled to have found a team that shares in
TerrAscend’s values and vision and look forward to working together with
Greg and his team as we continue to build the leading North American Operator
(NAO) in the cannabis space. »

« It’s clear that we’ve found a great strategic and cultural fit with
TerrAscend, » said Greg Rochlin, CEO of Ilera. « We’re proud of the
company we’ve built and we’re excited to have found a partner who recognizes
the quality and potential of our seed-to-store operations. TerrAscend’s roots
in health sciences and their commitment to innovation and quality make them the
ideal partner for us as we grow our business. We’re excited to become part of
this inspirational team which has made substantial progress in becoming one of
the leading companies in the sector, while putting patients first. »

Osagie Imasogie, Chairman of the Board for Ilera Healthcare said, « Our
board is truly excited and fully supports this transaction. Together Ilera and
TerrAscend bring a wealth of knowledge and expertise to the market. Our
alignment will provide an even greater service of care to patients in our
state. »

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