Mr. Luc Mongeau of Canopy Growth reports

CANOPY GROWTH TO ACQUIRE MTL CANNABIS; TRANSACTION EXPECTED TO CREATE CANADA'S LEADING MEDICAL CANNABIS BUSINESS AND ENHANCE CAPACITY TO SERVE GROWING INTERNATIONAL DEMAND

Canopy Growth Corp. and MTL Cannabis Corp. have entered into a definitive arrangement agreement, pursuant to which Canopy Growth will acquire all of the issued and outstanding common shares of MTL and will settle all debt and debt-like instruments owed by MTL, in a transaction valued at approximately $125-million on a fully diluted equity basis and approximately $179-million on an enterprise value (TEV) basis. Under the terms of the arrangement agreement, each shareholder of MTL will receive fixed consideration for each MTL share equal to: (i) 0.32 of a common share of Canopy Growth; and (ii) 14.4 cents in cash.

MTL was founded by Quebec-based entrepreneurs and brothers, Richard and Michel Clement, who built the company around a deep commitment to cultivating high-quality cannabis flower. The quality of the cannabis products produced by MTL's disciplined, craft-driven cultivation approach has earned national recognition, including being named Canada's No. 1 budtender-recommended brand in a 2024 Brightfield study. MTL brings proven operations excellence, loyal consumer demand and a record of producing cannabis that performs in market. Canopy Growth intends to leverage the expertise of the MTL team as it continues to elevate its cannabis product portfolio.

"MTL brings skilled operators, strong brands and a profitable business that will strengthen our leadership in Canada's medical market and deepens our presence in key Canadian adult-use markets, including Quebec. Their cultivation expertise, combined with our national scale, positions us to improve product quality, expand supply and accelerate our path to profitable growth. Together, we're building a stronger, more competitive Canadian business for the long term," said Luc Mongeau, chief executive officer of Canopy Growth.

"MTL was built on the idea that high-quality flower, grown with care and consistency, will always earn the trust of consumers and patients. Joining Canopy Growth gives us the platform to bring that philosophy to more Canadians. Our respective portfolios are highly complementary, and we see a strong opportunity to expand MTL's reach through Canopy Growth's national distribution and retail relationships. We're incredibly proud of what our team has built and look forward to working with Canopy Growth to continue elevating Canadian cannabis," said Richard Clement, co-founder and chief cultivation officer of MTL Cannabis.

Key transaction highlights

Expected to elevate Canopy Growth to the leading position in Canada's medical cannabis market

MTL's complementary patient network, strategically located clinics under the Canada House brand and established on-line medical channel, Abba Medix, expands Canopy Growth's ability to reach and support patients nationwide. With the addition of MTL, Canopy Growth's Canadian medical cannabis business is expected to establish the combined company as the leading medical cannabis provider in Canada.

Leveraging MTL's production assets to bolster flower supply for Canadian and international markets

Canopy Growth intends to fully integrate MTL's cultivation and postharvest assets into its supply chain. The resulting increase in high-quality flower supply is expected to enhance the company's ability to meet growing demand in the European medical cannabis market and support continued category growth in Canada.

Strengthens Canopy Growth's presence in Quebec, Canada's second-largest cannabis market

The transaction provides Canopy Growth with a more significant operational, brand and product footprint in Quebec, including two cultivation facilities, as well as the high-quality cannabis flower and hash products sold under the MTL and Quebec-exclusive R'Belle brands. The transaction is expected to meaningfully enhance the company's ability to serve Quebec's adult-use consumers.

Improves Canopy Growth's market ranking in core Canada adult-use product categories

MTL's award-winning, budtender-recommended brand portfolio holds No. 1 national market share in upper mainstream flower and No. 4 national market share in upper mainstream preroll joints (PRJ). The transaction establishes a combined company with the No. 7 position in total adult-use cannabis market share. Canopy Growth intends to leverage its broad distribution network and key relationships to expand the distribution of MTL's flower, PRJ and hash product portfolio in British Columbia, Alberta and Ontario.

Accretive transaction expected to support Canopy Growth's goal of achieving positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)

Upon closing of the transaction, MTL's profitable, on an adjusted EBITDA basis, cash-generating business will be integrated into Canopy Growth's ecosystem. MTL has previously reported net revenue of $84-million, 51-per-cent gross margin before fair-value adjustments and $11-million in operating cash flow in the trailing 12-month period ended Sept. 30, 2025 (TTM period). The transaction is expected to achieve potential cost synergies estimated at approximately $10-million, on an annualized basis, over a period of 18 months, which are expected to be realized from anticipated operating efficiencies and corporate integration. With MTL's reported strong gross margin performance and positive cash flow from operations and the anticipated posttransaction cost synergies, the acquisition of MTL is expected to be materially accretive to Canopy Growth's overall financial performance. Combined with the progress that Canopy Growth has made to reduce operating expenses during the fiscal year ended March 31, 2026, reported at over $20-million in expense reductions on an annualized basis as of the end of the six-month period ended Sept. 30, 2025, the company expects that the transaction will support its goal of achieving positive adjusted EBITDA.

Strengthen Canopy Growth's leadership capabilities through retention of key MTL management

The company expects to retain core members of MTL's leadership team, including its experience in cultivation and operations. MTL has proven expertise in high-quality flower production, genetics selection, supply chain management and facility operations. This will complement Canopy Growth's existing capabilities and reinforce operational discipline through integration and continuing cultivation improvement.

Further benefits to MTL shareholders

MTL shareholders receive attractive premium

The transaction provides MTL shareholders with a premium per MTL share of approximately 45 per cent based on the average 20-day volume-weighted average trading price of the MTL shares on the Canadian Securities Exchange and the Canopy Growth shares on the Toronto Stock Exchange as of Dec. 12, 2025.

Provides MTL shareholders enhanced and effectively immediate liquidity

The equity component of the consideration payable pursuant to the transaction allows MTL shareholders to benefit from the significantly greater liquidity of Canopy Growth shares relative to MTL shares. Canopy's average daily trading volume is in excess of $35-million per day, providing significant liquidity and monetizable value for MTL shareholders.

MTL shareholders gain greater exposure to global cannabis market

Through the equity component of the consideration payable pursuant to the transaction, MTL shareholders receive exposure to Canopy Growth's diversified global cannabis platform outside of Canada through principal operations in Europe and Australia and the highly differentiated and indirect exposure into the United States, the largest cannabis market in the world, through its unconsolidated, non-controlling interest in Canopy USA LLC.

Transaction details

Pursuant to the terms of the arrangement agreement, MTL shareholders will receive 0.32 of a Canopy Growth share and 14.4 cents in cash in exchange for each MTL share held. With 137 million MTL shares outstanding on a fully diluted basis as of Dec. 12, 2025, the total consideration paid for all outstanding MTL shares is approximately $125-million, not including the deemed value of up to 2,956,391 Canopy Growth shares being issued under the arrangement (as defined below) to certain former shareholders of Montreal Cannabis Medical Inc. (MC), which will be subject to an 18-month restriction on transfer, in exchange for a release of all prior obligations owing to the former MC shareholders in connection with MTL's prior acquisition of MC.

The transaction will be effected by way of a court-approved plan of arrangement under the Canada Business Corporations Act, requiring the approval of: (i) at least two-thirds of the votes cast by the MTL shareholders; and (ii) a simple majority of the votes cast by MTL shareholders excluding for this purpose the votes attached to MTL shares owned and/or controlled by any MTL shareholders required to be excluded under Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, voting at a special meeting of shareholders to consider the transaction expected to be held in the first calendar quarter of 2026.

In connection with the transaction, Canopy Growth has entered into irrevocable voting support agreements with certain directors and officers and certain key shareholders of MTL Cannabis, with such MTL shareholders representing approximately 75 per cent of the issued and outstanding MTL shares. The support and lock-up agreements also contain a lock-up provision, pursuant to which each such key shareholder of MTL Cannabis has agreed, subject to limited exceptions, not to, among other things, sell, transfer or otherwise dispose of Canopy Growth shares (or other Canopy Growth securities convertible or exercisable into Canopy Growth shares) such key shareholder of MTL Cannabis receives pursuant to the arrangement until: (a) with respect to 10 per cent of such locked-up securities, three months after the effective date of the arrangement, with respect to 20 per cent of the locked-up securities, six months after the effective date, with respect to 20 per cent of the locked-up securities, nine months after the effective date, and with respect to 50 per cent of the locked-up securities, 12 months after the effective date. Approximately 72 per cent of the Canopy Growth shares to be issued for the issued and outstanding MTL shares pursuant to the arrangement are subject to the lock-up.

In addition, Canopy Growth entered into consulting agreements with Richard and Michel Clement conditional upon closing of the transaction. The consulting agreements provide for, among other things, the grant of certain performance stock units to each of Richard and Michel Clement in the amount of $2-million. Canopy Growth also entered into an employment agreement with Michael Perron, MTL's chief executive officer, pursuant to which Mr. Perron will be appointed chief operating officer of Canopy Growth upon closing of the transaction and, subject to approval of the board of directors of Canopy Growth, provides for, among other things, the grant of: (i) certain restricted stock units in the amount of $30,000; and (ii) certain options with an aggregate exercise price as of the date of grant of $20,000.

In addition to MTL shareholder and court approvals, the transaction is subject to applicable regulatory approvals, including, but not limited to, TSX approval and approval under the Competition Act (Canada) and the satisfaction of certain other closing conditions customary in transactions of this nature. The arrangement agreement includes customary provisions, including non-solicitation, fiduciary-out and right-to-match provisions as well as a termination fee of $4-million payable by MTL Cannabis to Canopy Growth in certain specified circumstances.

Assuming timely receipt of all necessary court, MTL shareholder, regulatory and other third party approvals and the satisfaction of all other conditions, closing of the transaction is expected to occur before the end of February, 2026.

A full description of the transaction will be set forth in the management information circular of MTL Cannabis, which will be mailed or made available to MTL shareholders and filed with the Canadian securities regulators on SEDAR+.

Approvals and recommendation

The transaction was unanimously approved by the board of directors of Canopy Growth as well as the board of directors of MTL Cannabis (with conflicted directors abstaining), following the unanimous recommendation of a special committee of the MTL board of directors. The MTL special committee and the board of directors unanimously recommended that MTL shareholders vote in favour of the transaction after determining the transaction is fair to the MTL shareholders and is in the best interests of MTL Cannabis.

Haywood Securities Inc. provided the MTL Cannabis special committee with an opinion that, as of Dec. 14, 2025, and based upon and subject to the various assumptions, limitations, qualifications and other matters set forth in such opinion, the consideration to be received by the MTL shareholders pursuant to the transaction is fair, from a financial point of view, to MTL shareholders.

Advisers and counsel

Canaccord Genuity Corp. is acting as exclusive financial adviser to Canopy Growth. Cassels Brock & Blackwell LLP and Paul Hastings LLP are acting as legal counsel to the company.

Haywood Securities is acting as exclusive financial adviser to the MTL special committee and provided a fairness opinion to the MTL special committee. Farris LLP is acting as legal counsel to MTL Cannabis.

About Canopy Growth Corp.

Canopy Growth is a world-leading cannabis company dedicated to unleashing the power of cannabis to improve lives.

Through an unwavering commitment to consumers, Canopy Growth delivers innovative products from owned and licensed brands, including Tweed, 7Acres, Doja, Deep Space and Claybourne, as well as category-defining vaporization devices by Storz & Bickel. In addition, Canopy Growth serves medical cannabis patients globally with principal operations in Canada, Europe and Australia.

Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the U.S. THC (tetrahydrocannabinol) market through an unconsolidated, non-controlling interest in Canopy USA. Canopy USA's portfolio includes ownership of Acreage Holdings Inc., a vertically integrated multistate cannabis operator with operations throughout the U.S. Northeast and Midwest, as well as ownership of Wana Wellness LLC, The Cima Group LLC and Mountain High Products LLC, a leading North American edibles brand, and majority ownership of Lemurian Inc., a California-based producer of high-quality cannabis extracts and clean vape technology.

At Canopy Growth, the company is shaping a future where cannabis is embraced for its potential to enhance well-being and improve lives. With high-quality products, a commitment to responsible use, and a focus on enhancing the communities where we live and work, Canopy Growth is paving the way for a better understanding of all that cannabis can offer.

About MTL Cannabis Corp.

MTL Cannabis is the parent company of MC, a licensed producer operating from a 76,000-square-foot licensed indoor grow facility in Pointe-Claire, Que.; Abba Medix Corp., a licensed producer in Pickering, Ont., that operates a leading medical cannabis marketplace; IsoCanMed Inc., a licensed producer in Louiseville, Que., growing best-in-class indoor cannabis in its 64,000-square-foot production facility; and Canada House Clinics Inc., operating clinics across Canada that work directly with primary care teams to provide specialized cannabinoid therapy services to patients suffering from simple and complex medical conditions.

As a flower-first company built for the modern street, MTL Cannabis uses proprietary hydroponic growing methodologies supported by handcrafted techniques to produce products that are truly craft for the masses. MTL Cannabis focuses on craft-quality cannabis products, including lines of dried flower, prerolls and hash marketed under the MTL Cannabis, Low Key by MTL and R'Belle brands for the Canadian market through nine distribution arrangements with various provincial cannabis distributors. MTL Cannabis has also developed several export channels for bulk and unbranded GACP-quality (good agricultural and collection practice) cannabis.

It is MTL's goal for Abba Medix to become the leading distributor of medical cannabis in Canada and for Canada House Clinics to be the leading Canadian provider of medical cannabis clinic services.

We seek Safe Harbor.