Mr. John Philpott reports

CANABO MEDICAL INC. ANNOUNCES SIGNING OF DEFINITIVE AGREEMENT WITH ALEAFIA INC.

Canabo Medical Inc. has entered into a definitive agreement relating to the business combination with Aleafia Inc., a private corporation existing under the laws of Ontario with its head office in Concord, Ont. Aleafia operates the Aleafia total health network in Vaughan, Ont., and wholly owns a subsidiary that is a licensed producer in Canada to cultivate medical marijuana.

The definitive agreement provides that the proposed transaction is to be completed pursuant to a three-cornered amalgamation between Canabo, Canabo's wholly owned subsidiary, 2412550 Ontario Inc. (TCMC), and Aleafia, whereby TCMC and Aleafia will merge to form one amalgamated corporation. On the effective date of the amalgamation, all of the shareholders of Aleafia on the effective date will receive common shares of the company on a one-for-one-share basis, and all of the outstanding stock options and warrants of Aleafia on the effective date will be exchanged for stock options and warrants of the company on an equivalent basis.

Following the completion of the amalgamation, and subject to acceptance of the TSX Venture Exchange, Canabo's common shares will continue to be listed on the TSX-V, with all of the shareholders of Aleafia also becoming shareholders of Canabo, holding approximately 71 per cent of the total issued shares of the company prior to completion of the Aleafia private placement (as herein defined). Canabo will be the resulting listed issuer and continue to hold all of its other business and properties, as well as those of Aleafia, and the resulting issuer will have all of the company's liabilities, together with all of the liabilities of Aleafia, on a consolidated basis. The proposed transaction is being treated as a fundamental acquisition pursuant to the policies of the TSX-V.

The proposed transaction is subject to a number of conditions as set forth in the definitive agreement, including (without limitation): the approval of the shareholders of Aleafia, the completion of the Aleafia private placement (as defined below), and the receipt of all requisite regulatory and stock exchange approvals.

Prior to completion of the proposed transaction, Aleafia intends to complete a brokered private placement of at least 24 million subscription receipts on a best efforts basis for gross proceeds of approximately $30-million, at an offering price of $1.25 per subscription receipt. The agents (as defined below) will have the option exercisable any time up to 24 hours prior to the closing of the offering to increase the size of the Aleafia private placement by up to 15 per cent for a total offering size of up to $34.5-million. Each subscription receipt will, following the completion of the Aleafia private placement, and the satisfaction of certain escrow release conditions, entitle the holders to receive, without payment of additional consideration or taking of further action, one unit consisting of one common share and one-half of a common share purchase warrant in the capital of the resulting issuer. Each whole warrant is exercisable into one common share in the resulting issuer at a price of $1.75 for 18 months following the listing date (as defined below).

Mackie Research Capital Corp. will be a co-lead agent and the sole bookrunner for the Aleafia private placement, with Canaccord Genuity Corp., Clarus Securities Inc. and PowerOne Capital Markets Ltd. forming the selling syndicate. The agents shall receive a cash commission equal to 6.0 per cent (excluding the gross proceeds raised from investors on the president's list (as defined below), for which there will be a 3-per-cent commission), and will be issued compensation options to purchase the number of units of the resulting issuer equal to 6.0 per cent of the number of subscription receipts sold at a price of $1.25 for a period of 18 months from the date of listing of the resulting issuer's common shares (3.0 per cent of the number of subscription receipts raised from investors on the president's list). Aleafia will provide the agents with a list of eligible purchasers, together with an allocation for such purchasers, which allocation may only be varied upon Aleafia's agreement.

On the listing date, the gross proceeds from the Aleafia private placement, less the any agent expenses incurred up to and including the listing date, will be deposited into escrow, pending completion of the proposed transaction. If for any reason the proposed transaction does not close, then the proceeds will be refunded to the subscribers without penalty or deduction. Upon completion of the proposed transaction, it is expected that the resulting issuer will meet the listing requirements of an exchange Tier 1 life science issuer.

Further details with respect to the proposed transaction and the proposed financing, as well as a description of Aleafia and its business, are contained in Canabo's news releases dated Dec. 22, 2017, and Jan. 30, 2018.

The completion of the proposed transaction is expected to occur on the day that is the seventh business day following the satisfaction or waiver of the conditions precedent or such other date as mutually agreed to by the company and Aleafia, but in any event no later than March 30, 2018. Each of the company and Aleafia will bear its own respective costs and expenses associated with the proposed transaction.

About Aleafia Inc.

Aleafia operates the Aleafia total health network in Vaughan, Ont. Aleafia seeks to make a difference in cannabinoid therapy delivery by providing an interconnected medical service model. While most clinical programs are geared primarily toward postinjury rehabilitation, the Aleafia network is focused on the strong link between early intervention and successful treatment. The intent is to manage health through a patient-focused, assessment-based and interdisciplinary resourced organization.

Recently, Aleafia completed a transaction under which it acquired 100 per cent of the issued and outstanding shares of 755064 Ontario Inc., a licensed producer under the Health Canada Access to Cannabis for Medical Purposes Regulations (ACMPR), as well as the land and building in Scugog, Ont., where the facility operates. Aleafia acquired 755064 to directly support the clinic operations.

About Canabo Medical Inc.

Canabo wholly owns and operates Cannabinoid Medical Clinics, or CMClinics, Canada's largest physician-led referral-only clinics for medical cannabis. Established in 2014, Canabo now has 22 clinics across Canada, with additional locations planned to open in 2018. Canabo operates referral-only medical clinics dedicated to evaluating the suitability of prescribing and monitoring cannabinoid treatments for patients suffering from chronic pain and disabling illnesses. Clinics operated by Canabo are staffed by physicians and qualified health care practitioners specifically trained to assess patient suitability for cannabinoid treatment, recommend treatment regimes and monitor treatment progress.

In accordance with exchange policy, the company's shares are currently halted from trading and are expected to remain halted until after the exchange has reviewed the materials in support of the proposed transaction.

We seek Safe Harbor.