Aleafia and Serruya Private Equity finalize JV and financing agreement

CPE Media News (11/21/2018) – Aleafia Health Inc. (TSX-V: ALEF; OTCQX: ALEAF; FSE: ARAH) and Serruya Private Equity have finalized the terms of proposed joint venture (JV) and financing agreements.

Pursuant to the agreement, Aleafia and Serruya Private Equity will launch two joint ventures.

One Plant (Retail) Corp., a retail JV, will be 9.9% owned by Aleafia and 90.1% owned by Serruya. Aleafia will have the right of first refusal to increase ownership in One Plant (Retail) up to 49%.

Flying High Brands Inc., a domestic and international cannabis brands JV, will 51-49 owned Aleafia and Serruya. Aleafia will purchase its 51% stake by way of an issuance from treasury and the issuance of 6 million common shares in Aleafia to Serruya.

Serruya will make a $10 million strategic investment in Aleafia by way of a non-brokered private placement financing. Aleafia will invest $5 million of such gross proceeds into the JVs.

photo credit: Aleafia Health

News Release

Aleafia and Serruya Private Equity Reach Agreement for National Retail Dispensary, top Performing Brands and $10M Investment

Transactions Positions Aleafia as Major Supplier, Retailer of Adult-use Cannabis

TORONTO, Nov. 21, 2018 — Aleafia Health Inc. (TSXV: ALEF; OTCQX: ALEAF, FRA: ARAH) (“Aleafia“ or the “Company“), and Serruya Private Equity (“Serruya” and together with the Company, the “Parties”), have settled final forms of definitive joint venture and other agreements that will see the Parties launch a Canada-wide cannabis retail Joint Venture (“Retail JV”) along with a domestic and international cannabis brands Joint-Venture (“Brands JV”, and together with the Retail JV, the “Joint Venture”). Serruya will also make a $10 million strategic investment in Aleafia via a non-brokered private placement financing (“Private Placement”) and Aleafia will invest $5 million of such gross proceeds of the Private Placement into the Joint Venture.

The Brands JV will conduct business under the name “Flying High Brands Inc.” with Aleafia owning fifty-one percent (51%) and Serruya owning forty-nine percent (49%). The Joint Venture enables multiple income streams throughout the value chain, with Aleafia’s cultivation producing cannabis for processing, extraction, packaging and eventual listing in retail locations and with provincial distributors.

Additional Highlights:
• Backed and supported with a $10 million investment by Serruya and its affiliate, International Franchise Inc., which has over 4500 quick service restaurant locations in over 50 countries
• Serruya has also been a leading early cannabis industry force as cannabis industry investors in both emerging and established issuers and other industry participants
• Launch approximately 20 proposed retail outlets, with a subsequent national and international expansion plan (excluding the U.S.)
• With turn-key store launch, licensing agreements cover established, commercially proven international cannabis brands
• Ready-made store design and retail systems in place, along with intellectual property including genetics and packaging

“We greatly look forward to working closely with Aleafia’s strong management team. Together we will build and scale a retail cannabis chain with immediate national reach and global expansion plans,” said Aaron Serruya, a principal of SPE. “We are very excited to once again play an early role in developing one of the world’s largest cannabis companies.”

“Aleafia is now well positioned to produce commercially proven international cannabis brands for our national cannabis retail network along with provincial distributors,” said Aleafia Chief Executive Officer Geoffrey Benic. “In launching adult-use cannabis operations, we will greatly benefit from working with and receiving Serruya’s substantial financial backing. These transactions will see Aleafia immediately assume a leadership role in adult-use cannabis production, supply and retailing, complementing our proven medical cannabis operations.”

Strategic Investment:

Serruya will also make a strategic investment in Aleafia through a $10 million non-brokered private placement and in return acquire 5 million common shares in Aleafia at a price of $2.00 per share.

The Retail JV will conduct business under the name “One Plant (Retail) Corp.” with Aleafia owning 9.9 percent and Serruya owning 90.1 percent. Aleafia will have the right of first refusal to increase ownership in the Retail JV up to 49 percent, subject to compliance with applicable provincial regulations at all material times. Aleafia will purchase its 51 percent stake in the Brands JV company by way of an issuance from treasury and the issuance of 6 million common shares in Aleafia to Serruya.

The transactions are subject to customary closing conditions, including receipt of final approvals of the TSX Venture Exchange.

For Investor & Media Relations, please contact:
Nicholas Bergamini, VP, Public Affairs
IR@AleafiaInc.com

About Aleafia Health Inc.:

Aleafia is a vertically integrated, national cannabis company with major medical clinic, cannabis cultivation and R&D operations. The company is a federally licensed producer and vendor of cannabis and will reach an annual production capacity of 98,000 kg of dried cannabis in 2019.

Aleafia operates 22 medical cannabis clinics staffed by physicians and nurse practitioners, with over 50,000 patients. The company is highly differentiated, maintaining the largest medical cannabis dataset in the world with significant intellectual property holdings and current R&D operations.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

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