Ms. Margot Micallef reports

GABRIELLA'S KITCHEN ENTERS INTO AGREEMENT TO ACQUIRE SONOMA PACIFIC DISTRIBUTION, A CALIFORNIA LEADER IN CANNABIS DISTRIBUTION AND MARKETING

Gabriella's Kitchen Inc. has entered into a binding agreement to acquire all of the shares of Sonoma Pacific Distribution, California's premier independently owned cannabis distribution and marketing company. Sonoma holds a distribution licence for the state of California, issued by the Bureau of Cannabis Control.

Under the agreement, the Sonoma shareholders will receive common shares in Gabriella's Kitchen equal to 1.0 times the verifiable licensed revenue of Sonoma for the fiscal year ended Dec. 31, 2018, calculated as at the company's volume-weighted average price (VWAP) for the 20-day period ending at the market close on Oct. 23, 2018, the date the transaction was announced. It is anticipated that the total value of the Gabriella's Kitchen shares to be issued under the agreement at closing will range between $3.5-million (U.S.) and $5.5-million (U.S.). The Gabriella's Kitchen shares will be immediately issued in escrow based on the estimated revenue of $5.5-million, pending verification by Gabriella's Kitchen's auditors and shall be releasable from escrow on the day following the public release of Gabriella's Kitchen's fiscal 2018 year-end financial statements based on the actual 2018 revenue. If the 2018 revenue exceeds the estimate of $5.5-million, additional Gabriella's Kitchen shares will be issued at the VWAP for the 20-day period ending at the market close on the release date. The Sonoma shareholders will be further entitled to an earnout equal to 0.35 times the difference between the 2018 revenue and the verifiable licensed revenue of Sonoma realized as at Dec. 31, 2019. The earnout will be paid in additional Gabriella's Kitchen shares with the value calculated as at the company's VWAP for the 20-day period ending on the day following the public release of the consolidated Sonoma and Gabriella's Kitchen fiscal 2019 year-end financial statements.

The proposed acquisition of Sonoma, coupled with Gabriella's Kitchen's previously announced acquisition of the Oil Plant (TOP) and its manufacturing licence, allows Gabriella's Kitchen to control the path from product conception to consumer, giving the company a portal to directly reach its customers. It also affords Gabriella's Kitchen ownership of its manufacturing and distribution infrastructure in California, being one of the most significant cannabis markets in the world, positioning the company for present market opportunities as well as larger future market opportunities. Should federal legalization in the United States remove the barriers to interstate commerce, Gabriella's Kitchen will have the infrastructure needed to quickly expand into the remaining U.S. states.

As part of the transaction, Aaron Browe, founder and president of Sonoma, will join Gabriella's Kitchen as the senior vice-president responsible for global distribution of Gabriella's Kitchen's cannabis-infused product portfolio. In this capacity, Mr. Browe will oversee the internal and external sales teams in the infused channel markets in the United States and will immediately start the process of establishing distribution relationships in Canada and globally.

Ashley Oldham, current chief operating officer of Sonoma, will continue day-to-day management of Sonoma under the continued oversight of Mr. Browe.

"In our quest to build the category leader in cannabis wellness, it is imperative that we own both our manufacturing and distribution infrastructure in the largest and most significant cannabis- and wellness-focused market in the world," said Margot Micallef, founder and chief executive officer of Gabriella's Kitchen. "By bringing Sonoma Pacific into our family, we have achieved our goal of having a direct link to our customers. We are also pleased to rely on Aaron's distribution prowess to partner with other worldwide distributors to build our global footprint working alongside the dedicated team he has built to date."

"When I founded Sonoma Pacific, I wanted to shape the direction of the cannabis industry to ensure cultivators were treated fairly, dispensaries were serviced professionally and consumers had access to great products. As an independent distributor in California, the Sonoma team has done that to the degree we could," said Aaron Browe, Gabriella's Kitchen's newly appointed senior vice-president of global distribution. "With GABY's capital market savvy, deep experience in building companies, broad distribution infrastructure in the mainstream channel and experienced product development and manufacturing team, Sonoma Pacific is ideally positioned to realize our goal of being a leader in the cannabis space and truly help shape the future of the industry. We are also excited to work more closely with Mara Gordon, GABY's chief research officer, who I know well, and to leverage her thought leadership in the cannabis sector. "

About Gabriella's Kitchen Inc.

Gabriella's Kitchen is a pure play cannabis wellness company. With its existing infrastructure of major retailers and an extensive broker and distribution network, Gabriella's Kitchen is positioned to service mainstream grocery with cannabidiol-infused products and licensed cannabis retailers with CBD- and tetrahydrocannabinol-infused products throughout Canada and the United States. The company's non-infused products are currently available in more than 3,400 major retail stores across the U.S. and Canada.

About Sonoma Pacific Distribution

Sonoma Pacific is an independent, distribution company licensed by the California Bureau of Cannabis Control. With multiple offices throughout California, Sonoma Pacific distributes an array of products to hundreds of licensed retail dispensaries throughout California. It is the mission of Sonoma Pacific Distribution to provide services to like-minded brands, producers and farmers which share the company's vision of a cannabis industry dedicated to the health of the environment, economy and community. By partnering with businesses that prioritize artfully branded, sustainably grown products, thoughtfully crafted by a work force paid a living wage, Sonoma Pacific can shape the future of the cannabis industry and enrich the lives of those it serves.

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