Mr. Mark Aiken reports

CHRISTINA LAKE CANNABIS ANNOUNCES ACQUISITION AGREEMENT AND FINANCING

Christina Lake Cannabis Corp. has signed a definitive agreement to acquire certain assets from a private British Columbia corporation. The proposed transaction includes acquiring ownership of outdoor cultivation facilities in Southern British Columbia, related harvesting and manufacturing equipment, and approximately 19,000 kilograms of biomass for a total purchase price of $3-million. The transaction is expected to close on Feb. 9, 2024, subject to completion of customary closing conditions.

With this acquisition, the company will expand its licensed outdoor cultivation footprint by approximately 100 acres. The first crop of propriety CLC strains will be planted in the spring of 2024. Enhancements to the company's processing infrastructure over the last 12 months ensure that the company will be able to meet growing customer demand and handle the expanded cultivation capacity.

The purchase price for the proposed acquisition will be paid through the issuance of a secured convertible promissory note. The notes shall be secured by the land and buildings acquired in the transaction. The note bears interest at a rate of 10 per cent per annum for year 1, 15 per cent per annum for year 2 and 20 per cent per annum for the remaining three years. Repayment of the note shall be interest only payments paid annually on the anniversary dates for the first 24 months of the term, then quarterly interest payments thereafter, and $1-million principal repayments on or before each anniversary payment date until the remaining principal amount of this note is satisfied in full. Outstanding principal and unpaid interest from the note will be convertible into common shares at a conversion price of five cents per common share during the term. The vendor shall have the right to convert the note at any time, subject to a notice period. Additionally, the company shall have the right to repay the note at any time during the term together with prepayment of any remaining interest payable under the note.

A copy of the definitive agreement will be available under the company's profile on SEDAR+.

Private placement

In addition to the note issued in connection with the transaction, the company intends to complete a non-brokered financing with gross proceeds of up to $2.5-million. Pursuant to the offering, the company will issue notes on substantially the same terms as the notes issued under the transaction, however the security under the financing notes against the land and buildings acquired in the transaction will be subordinated to the security granted to the vendor. The financing notes will also be granted a subordinated security interest over another existing property of the company. The financing notes will bear interest and repayment at the same schedule as the above note issuable to the vendor in the transaction. Outstanding principal and unpaid interest from the financing notes will be convertible into common shares at a conversion price of five cents per common share during the term. Subscribers shall have the right to convert the financing notes at any time, subject to a notice period. Additionally, the company shall have the right to repay the financing notes at any time during the term, together with prepayment of any remaining interest payable under the financing notes.

The company expects to close the initial tranche of the offering on or about Feb. 26, 2024. The proceeds of the offering are expected to be used for upgrades to the equipment and facilities acquired in the transaction and for new site preparation and development.

Certain directors and officers of the company may acquire financing notes under the offering. Such participation will be considered to be a related party transaction as defined under Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. The company anticipates relying on exemptions from the minority shareholder approval and formal valuation requirements applicable to the related-party transactions under sections 5.5(b) and 5.7(1)(b), respectively, of MI 61-101, as neither the fair market value of the financing notes to be acquired by the participating directors and officers nor the consideration to be paid by such directors and officers is anticipated to exceed $2.5-million.

About Christina Lake Cannabis Corp.

Christina Lake Cannabis is a licensed producer of cannabis under the Cannabis Act. It has secured a standard cultivation licence and corresponding processing amendment from Health Canada (March, 2020, and August, 2020, respectively) as well as a research and development licence (early 2020). Christina Lake Cannabis's facility consists of a 32-acre property, which includes over 950,000 square feet of outdoor grow space, offices, propagation and drying rooms, research facilities, and a facility dedicated to processing and extraction. Christina Lake Cannabis also owns a 99-acre plot of land adjoining its principal site. Christina Lake Cannabis focuses its production on creating high-quality extracts and distillate for its business-to-business client base with proprietary strains specifically developed for outdoor cultivation to enhance extraction quality.

We seek Safe Harbor.