Mr. Marc Lustig reports

CANNAROYALTY ANNOUNCES OPERATIONAL MERGER OF RVR DISTRIBUTION AND DEFINITIVE AGREEMENT FOR CLOSING OF RVR DISTRIBUTION ACQUISITION

CannaRoyalty Corp. will merge the operations of its subsidiary Alta Supply with RVR Distribution. Effective Aug. 31, 2018, Sadie Reyes, president of Alta Supply, was appointed to the position of president of RVR to lead the company's state-wide distribution efforts. Alta Supply has begun to leverage RVR's distribution infrastructure, through transfer of inventory and accounts.

Today, CannaRoyalty has signed a definitive agreement to close the previously announced merger of RVR with Alta Supply, subject to customary closing conditions. Pursuant to the close, RVR will receive exchangeable shares as consideration, which will allow RVR shareholders to acquire 70,000 CannaRoyalty Class A shares over the next 24 months.

"CannaRoyalty identified early on that distributors would be critical gatekeepers and growth catalysts in California's regulated cannabis marketplace," said Marc Lustig, chairman and chief executive officer of CannaRoyalty. "With this merger, CannaRoyalty is leveraging two prominent California-grown distributors to build the pre-eminent third party distributor in the state. We already reach into the vast majority of licensed dispensaries and distribute a growing number of the world's top legal cannabis consumer brands and products. And since California's transition into a full adult-use market on Jan. 1, RVR and Alta have consistently broken monthly revenue records. Adding RVR revenue to CannaRoyalty's top line will position the company to exit Q4 with a revenue run rate comparable to the largest public North American cannabis companies."

"The functional merger of Alta Supply and RVR provides the framework for the platform we're building in California: The home of origin for the future's global cannabis brands. These acquisitions have provided us with a growth engine that we are feeding with more business, through the injection of growth capital and revenue-catalyzing support services to our brand and retail partners. A few of these innovative partnerships, such as Pacific Remedy and Utopia, have already been disclosed, and we are in the process of negotiating a multitude of others," commented Afzal Hasan, president and general counsel at CannaRoyalty.

The closing of the acquisition of RVR, and the previously disclosed acquisition of Alta Supply Inc., will merge the strengths of both companies, and position CannaRoyalty as the largest third party distribution platform in the California cannabis marketplace.

Transaction summary

• All consideration will be in CannaRoyalty shares and issued in instalments.
• RVR will receive exchangeable shares that will enable the recipients to acquire 70,000 Class A CannaRoyalty shares (17,500 shares at close and 52,500 shares over the next 24 months) for no additional consideration.
• Each Class A compressed share shall be convertible into 100 common shares (1).
• On closing, it is anticipated that CannaRoyalty will have 54,801,068 common shares outstanding and 83,294,904 shares outstanding on a fully diluted basis.
• Closing of the acquisition remains subject to finalization of definitive closing documentation and requisite board approvals.

(1) Management informational circular dated May 8, 2018.

About CannaRoyalty Corp.

CannaRoyalty is a North American cannabis consumer product company currently focused on building a leading distribution business in California, the world's largest regulated cannabis market. By building a world-class logistics platform and supporting contract manufacturing assets, the company intends to support the growth of new and established cannabis brands. The company believes California, home to some of the world's most discerning consumers and a nexus of information and trends, will be the point of inception for the global cannabis brands of the future. CannaRoyalty has developed a diversified portfolio of assets within the cannabis sector, including research, infrastructure and intellectual property to support its existing brands, partner products and distribution networks.

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