Mr. Bruce Linton of Canopy Growth reports

CANOPY GROWTH ENTERS INTO AGREEMENT TO ACQUIRE METTRUM

Canopy Growth Corp. and Mettrum Health Corp. have entered into a definitive arrangement agreement pursuant to which Canopy Growth will acquire all of the issued and outstanding shares of Mettrum, creating a world-leading diversified cannabis company with six licensed facilities and a licensed production footprint of approximately 665,000 square feet, with significant acreage for expansion.

Significant additional production capacity and brand diversification to Canopy Growth, Canada's leading cannabis company:

• Canopy Growth will add two national brands to its portfolio, increasing its production platform to 665,000 square feet, and furthering its position as a domestic and global leader.
• Acquisition provides Canopy Growth with a full-spectrum product offering, including expansion of medically focused and lifestyle brands and the addition of a natural hemp brand.
• Acquisition rounds out best-in-class management with significant industry experience.
• Acquisition allows for sharing of best practices and production standards, with the potential to reduce costs and realize revenue synergies.
• Mettrum shareholders to receive 0.7132 common share of Canopy Growth for each common share of Mettrum.

The total transaction is valued at approximately $430-million and will be satisfied by the issuance of common shares in Canopy Growth. Under the terms of the arrangement agreement, Mettrum shareholders will be entitled to receive 0.7132 common share of Canopy Growth for each common share of Mettrum, representing consideration of $8.42 per Mettrum common share based on the closing price of Canopy Growth common shares on the Toronto Stock Exchange on Nov. 30, 2016. Upon completion of the arrangement, existing Canopy Growth and Mettrum shareholders are expected to own approximately 77.7 per cent and 22.3 per cent, respectively, of the pro forma company.

Strategic rationale:

• Dominant market position: Postacquisition, Canopy Growth will continue to fortify its position as the largest medical marijuana company in Canada and as a global leader with total licensed production square footage of approximately 665,000 square feet, with significant acreage for additional expansion.
• Expanded and diversified portfolio of nationally recognized cannabis and hemp brands: The combined company will bring together Mettrum's simple, recognizable and proven Mettrum Spectrum brand, with the pure medically focused brand of Bedrocan Canada and the approachable, lifestyle-focused brand of Tweed. On the hemp side of the business, the integration of Mettrum Originals with Canopy Growth's recently acquired hemp website platform will solidify Canopy Growth's position in the hemp market.
• Cost and revenue synergies: The company expects to realize improved supply chain management and back-office efficiencies, cross-selling to customers given broader product offerings and combined research capabilities.
• Industry-leading management team: The combined company will have best-in-class management with significant and diverse industry experience.
• Well capitalized for further global growth: Postacquisition, Canopy Growth's cash balance of approximately $68-million positions the company with one of the strongest balance sheets in the industry and leaves the company well financed for expansion and product development initiatives.
• Enhanced financial scale and presence: The company will have a widely recognized and scalable platform to attract additional patients and to position the company favourably within all distribution channels.

"From day one, Canopy Growth has viewed production capacity, brand diversity and highly skilled management as the foundational aspects of our business," said Bruce Linton, chairman and chief executive officer of Canopy Growth. "Mettrum has established a line of cannabis products that work well in a medical context and will transition naturally into a natural and healthy lifestyle market. Their substantial production facilities will add to our growing production platform as we expand to meet the needs of patients, and their experienced personnel will help Canopy Growth drive our vision forward to the next level."

Added Mr. Linton, "Both Canopy Growth and Mettrum have proven themselves with Canadian patients, and together, we intend to make our industry-leading product and service offering even stronger, while developing our common hemp objectives."

"Canopy Growth and Mettrum have enjoyed a collaborative industry relationship working on a number of patient and industry advocacy efforts," said Michael Haines, chief executive officer of Mettrum. "Combining our companies' complementary market strengths, and management expertise, should result in a more dynamic company well positioned for emerging recreational and international opportunities."

Arrangement summary

The arrangement agreement provides that Mettrum shareholders will be entitled to receive 0.7132 common share of Canopy Growth for each common share of Mettrum held, representing consideration of $8.42 per Mettrum common share based on the closing price of Canopy Growth common shares on Nov. 30, 2016. Upon closing of the acquisition, Mettrum will become a wholly owned subsidiary of Canopy Growth.

Each of the executive officers and directors of Mettrum, who together hold approximately 15 per cent of the outstanding common shares of Mettrum, has entered into voting support agreements in favour of the arrangement.

The arrangement agreement provides that Mettrum is subject to non-solicitation provisions and provides that the special committee of Mettrum may, under certain circumstances, terminate the arrangement in favour of an unsolicited superior proposal, subject to a termination fee of $10-million to Canopy Growth and subject to a right to match the superior proposal. The arrangement agreement includes other customary termination provisions where a termination fee is payable to Canopy Growth or Mettrum under certain circumstances.

The acquisition will be carried out by way of a plan of arrangement under the Business Corporations Act (Ontario) and will require the approval of at least 66-2/3rds per cent of the votes cast by Mettrum shareholders at a special meeting expected to take place in January, 2017.

Under applicable Toronto Stock Exchange rules, the transaction requires the approval of Canopy Growth shareholders by a majority vote, as the number of Canopy Growth common shares to be issued exceeds 25 per cent of the total number of outstanding Canopy Growth common shares, with such approval expected to take place at a special meeting in January, 2017. Senior officers and directors of Canopy Growth have also entered into voting support agreements pursuant to which they will vote their common shares in favour of the arrangement.

Closing remains subject to approval of the shareholders of both Canopy Growth and Mettrum, court approval, the approval of the Toronto Stock Exchange, applicable regulatory approvals, and the satisfaction of certain other closing conditions customary in transactions of this nature.

Additional details of the arrangement will be provided to Mettrum and Canopy Growth shareholders in respective information circulars to be mailed in December, 2016. It is expected that shareholder meetings and closing of the arrangement will occur in January, 2017.

Board recommendations

The board of directors of both Canopy Growth and Mettrum has unanimously approved the transaction and recommends that shareholders vote in favour of the transaction. The board of directors of Mettrum has acted on the unanimous recommendation of the special committee composed solely of independent directors. Dundee Securities Ltd. provided a fairness opinion to the board of directors of Canopy Growth, stating that in its opinion, and based upon and subject to the assumptions, limitations and qualifications set forth therein, the exchange ratio pursuant to the arrangement is fair, from a financial point of view, to the Canopy Growth shareholders. Cormark Securities Inc. has provided a fairness opinion to the special committee of the board of directors of Mettrum, stating that in its opinion, and based upon and subject to the assumptions, limitations and qualifications set forth therein, the exchange ratio pursuant to the arrangement is fair, from a financial point of view, to Mettrum shareholders. In addition, Echelon Wealth Partners Inc. provided a fairness opinion to the special committee of the board of directors of Mettrum, stating that the arrangement is fair, from a financial point of view, to the Mettrum shareholders, subject to certain assumptions, limitations and qualifications.

Integrated quality assurance approach

The company is confident that Mettrum's response to the events that led to the recall will result in operational practices that will advance the quality and standards of the production of cannabis at Mettrum's facilities.

Mettrum will continue to lead site activities with Health Canada as it fulfills its obligations for products affected by the previously announced Type 3 recall.

Canopy Growth has established a strong multisite record of regulatory compliance across diversified production sites, making it uniquely capable of implementing best practices and moving forward to the highest production standards under the access to cannabis for medical purposes regulations issued pursuant to the Controlled Drugs and Substances Act (Canada).

Financial and legal advisers

Dundee Securities is acting as financial adviser to Canopy Growth with LaBarge Weinstein LLP acting as legal adviser to the company.

Cormark Securities is acting as financial adviser to Mettrum, Goodmans LLP is acting as legal counsel to Mettrum and Aird & Berlis LLP is acting as legal counsel to the special committee of Mettrum.

Conference call information

Canopy Growth and Mettrum will host a joint conference call to discuss the transaction on Dec. 1, 2016, at 8:30 a.m. (Eastern Daylight Time). A copy of the presentation can be found on Canopy Growth's website.

Calling information:

Toll-free dial-in number:  1-888-231-8191

International dial-in number:  647-427-7450

Conference ID:  30771775

Replay information:

A replay of the call will be accessible by telephone until 11:59 p.m. ET on Jan. 1, 2017.

Toll-free dial-in number:  1-855-859-2056

Replay passcode:  30771775

A live audio webcast will be available.

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