Mr. David Klein reports

CANOPY GROWTH ANNOUNCES PLAN TO ACQUIRE JETTY EXTRACTS

Canopy Growth Corp. and Lemurian Inc. (Jetty), a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology, have entered into definitive agreements providing Canopy Growth, by way of a wholly owned subsidiary (Canopy Sub), the right to acquire, upon federal permissibility of THC (tetrahydrocannabinol) in the United States or earlier at Canopy Growth's election, up to 100 per cent of the outstanding capital stock of Jetty.

Founded in 2013, Jetty is a top-10 cannabis brand in California and a top-five brand in the vape category. Backed by award-winning technology, Jetty has paved the way for the most authentic and natural vape experience available to consumers. As a leader in solventless vape and a pioneer of extraction-related intellectual property (IP), Jetty has achieved strong growth over the past two years while generating positive EBITDA (earnings before interest, taxes, depreciation and amortization) amidst the highly competitive California cannabis market.

These agreements present Jetty with potential opportunities to collaborate across Canopy's robust U.S. THC ecosystem, which already includes the right to acquire both Acreage Holdings Inc. and Wana Brands as well as a significant conditional ownership interest in Terrascend Corp. The two companies are also exploring avenues through which Jetty could bring the brand and its innovative product lineup to the Canadian recreational market to fully realize the North American, cross-border potential of Jetty's industry-leading IP (intellectual property).

Strategic benefits:

• Further accelerates the growth of the company's U.S. THC ecosystem: Through these agreements, Canopy Growth continues to develop its robust U.S. ecosystem by adding an established cannabis brand that is the market share leader in solventless vapes, holding more than 75-per-cent share of the rapidly expanding California market with monthly sales growing by over 45 per cent from February, 2022, to March, 2022. This strategic investment is aligned with Canopy Growth's U.S. THC strategy and will help position the company to unlock the full potential of the U.S. market upon exercise of the options granted under the agreements.
• Extraction technology: Jetty has developed industry-leading capabilities in extraction and clean vape technology. As one of the first brands to bring to market a vape free of fillers and cutting agents, Jetty has built on that legacy with the 2021 launch of its solventless vape and concentrate collection, made from just ice, water, heat and pressure. Its products have received critical acclaim, winning best vape at the 2021 Cannabis Cup, in addition to consumer success with the top eight solventless vape SKUs (stock-keeping units) in California and the No. 1 Pax Era pods brand three years in a row.
• Establishes a foothold in the largest U.S. THC market: Jetty is a beloved California brand and upon exercise of the options granted under the agreements, would give Canopy Growth a critical position in the largest and most historically significant THC market in the United States. Jetty's established presence as the fifth-largest vape brand in the California market is supported by nine years of operations and serving cannabis consumers with unrefined live resin, high-THC distillate vapes, infused prerolled joints and solventless vape products.

"Canopy Growth is building a house of premium cannabis brands with a focus on the core growth categories that will power the market's path forward, now including Jetty -- a pioneer of solventless vapes," said David Klein, chief executive officer of Canopy Growth. "There are significant opportunities for Jetty to scale at the state level across the U.S. by leveraging Canopy's U.S. ecosystem, and we're actively working on plans to bring the brand to the Canadian recreational market."

"Jetty has put the consumer at the heart of our focus since the outset, and we're proud to have pioneered the cleanest vape technology on the market. This agreement between Canopy Growth and Jetty is mutually beneficial and provides long-term growth opportunities for our employees and our brand. Canopy shares our vision and will support us as we bring the highest-quality Jetty products to consumers across North America and the world. We can't wait to be a part of what Canopy is building as we continue to define the future of cannabis and introduce more consumers to what makes Jetty products so special," said Ron Gershoni, co-founder and chief executive officer of Jetty. "Along with founding members Nate Ferguson and Rob Ferguson, we look forward to continuing to lead our team at Jetty and working alongside the team at Canopy to further expand our brand."

Transaction details

The agreements are structured as two separate option agreements, whereby Canopy Growth has a call option to acquire up to 100 per cent of the equity interests in Jetty.

Under the agreements, Canopy Growth will make aggregate upfront payments in the amount of approximately $69-million (U.S.), payable through a combination of cash and Canopy Growth common shares, a majority of which will be Canopy Growth common shares, in exchange for approximately 75 per cent of the equity interests in Jetty, subject to certain adjustments.

Upon exercise of the rights to acquire up to 100 per cent of the equity interests in Jetty covered by the first option agreement, Canopy Growth will make an additional payment pursuant to the terms of the agreements, also to be satisfied through a combination of cash and Canopy Growth common shares.

Until such time as Canopy Sub elects to exercise its rights to acquire Jetty, Canopy Growth and Canopy Sub will have no direct or indirect economic or voting interests in Jetty, Canopy Growth and Canopy Sub will not directly or indirectly control Jetty, and Canopy Growth and Canopy Sub, on the one hand, and Jetty, on the other hand, will continue to operate independently of one another.

Counsel

Paul Hastings LLP is acting as U.S. legal counsel to Canopy Growth. Cassels Brock & Blackwell LLP is acting as Canadian legal counsel to Canopy Growth. Raines Feldman LLP is acting as legal counsel to Jetty.

About Canopy Growth Corp.

Canopy Growth is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, the company offers product varieties in high-quality dried flower, oil, soft-gel capsule, infused beverage, edible and topical formats as well as vaporizer devices by Canopy Growth and industry leader Storz & Bickel. Canopy Growth's global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Through the company's award-winning Tweed and Tokyo Smoke banners, Canopy Growth reaches its adult-use consumers and has built a loyal following by focusing on top-quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets, including Canada, the United States and Europe, through BioSteel sports nutrition and This Works skin and sleep solutions; and it has introduced additional hemp-derived CBD (cannabidiol) products to the United States through the company's First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands.

About Jetty Extracts

Founded in 2013, Jetty is one of the true originals in the California cannabis market. Jetty began its operations in San Diego with a focus on craft and innovation while applying a strict adherence to compliance, fiscal responsibility, environmental concerns and community commitment (with a little time for some surfing in between). Today, Jetty's 65-plus employees work at the company's 14,000-square-foot Oakland headquarters and various other locations throughout California. The company continues to focus on its state-of-the-art production facility, utilizing the latest technology to create industry-leading extracts, including award-winning solventless vape, live resin vape and other products. Jetty also founded and operates The Shelter Project, a need-based program that has provided over $1-million worth of free cannabis products to cancer patients.

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