Mr. Scott Hurd reports

WESTLEAF RECEIVES HEALTH CANADA STANDARD PROCESSING LICENCE

Westleaf Inc. has received a standard processing licence for its large-scale cannabis extraction, processing and product formulation facility, The Plant by Westleaf Labs, from Health Canada and is ready to start operations immediately. The standard processing licence will allow Westleaf to process bulk cannabis to create and sell derivative products through a variety of commercial arrangements.

"This is a major catalyst for Westleaf to generate material revenue through the sale of derivative cannabis products and by offering contract manufacturing services," said Scott Hurd, president and chief executive officer of Westleaf. "The issuance of the standard processing licence is timely as Westleaf prepares to launch its cannabis 2.0 products upon legalization, which is expected on Oct. 17, 2019."

Cannabis 2.0 is the legalization of the next wave of recreational and medicinal cannabis products currently set to begin in Canada on Oct. 17, 2019. It will allow cannabis manufacturers and retailers to provide consumers with a wide range of new cannabis products including high-quality and safe vape cartridges, edibles, concentrates and other oil products.

The 15,000-square-foot phase 1 of the facility has been built to European Union good manufacturing practice (GMP) specifications and is designed to process up to approximately 65,000 kilograms (kg) of dried cannabis per annum into anticipated high-quality edibles, concentrates, vape and oil products, including Westleaf's first in-house product, a line of vape pens under the brand General Admission, as well as products under the company's other house brand, Backstage, and wellness brand, Loon. The Plant has an additional 45,000 square feet of space to expand extraction capacity, as well as add additional product lines based on consumer preferences once the additional products are licensed post-Oct. 17, 2019.

With the pending legalization of cannabis derivative products, Westleaf anticipates strong industry-wide demand for efficient extraction, processing and formulation capacity. The scalability of The Plant ensures Westleaf is well positioned to capitalize on the expected demand growth for contract manufacturing, tolling arrangements, white labelling and in-house product formulation. In July, 2019, Westleaf signed its first extraction contract with Delta 9 for white label derivative cannabis products worth at minimum approximately $4-million per annum, with an option to increase up to $16-million per annum.

"The Delta 9 contract is the first of what we hope to be a number of similar arrangements between licensed producers, product developers and others who are preparing for the coming legalization of derivative cannabis products such as vapes, edibles, topicals and beverages, or what is called cannabis 2.0," noted Mr. Hurd. "We are preparing Westleaf to be in a strong position to capitalize on the expected spike in consumer demand for these products later this year and into 2020 and beyond."

In addition, Westleaf has now satisfied ATB's condition precedent (receipt of Health Canada standard processing licence) to draw the previously announced $3.7-million of additional capital in the form of a $2.7-million term loan and a $1-million line of credit for working capital purposes.

Westleaf operational updates:

• Prairie Records: Named the top retailer in Canada by the Grow UP Conference and Expo, Prairie Records is generating revenue through three stores in the Saskatoon region and one in Calgary, with up to 20 more locations under development, including downtown Calgary and Edmonton and a flagship store in the tourist centre of Banff, Alta.
• Thunderchild Cultivation: Phase 1 (80,000 square feet) of the large-scale cultivation facility in Battleford, Sask., is fully financed and on track for completion and submission of its Health Canada evidence package for a cannabis standard cultivation licence by the end of 2019.

About Westleaf Inc.

Westleaf is a Canadian cannabis company focused on cannabis brands, extraction and production of derivatives and wholly owned retail, as well as cannabis cultivation. The company's Health Canada-licensed extraction and processing facility, The Plant, is expected to produce high-quality and consistent cannabis derivatives and consumables, both for Westleaf's in-house brands, as well as white label products.

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