Mr. Colby De Zen reports

RED WHITE & BLOOM BRANDS' SUBSIDIARY, EMBLEM CANNABIS CORPORATION, COMPLETES ACQUISITION OF AYURCANN'S HEALTH CANADA-LICENSED MANUFACTURING OPERATIONS, LEADING VAPE & PRE-ROLL BRANDS, AND EXPANDED NATIONAL DISTRIBUTION CAPABILITIES

In connection with the insolvency proceedings of Ayurcann Inc. and its parent, Ayurcann Holdings Corp. under the Companies' Creditors Arrangement Act (the CCAA proceedings), Red White & Bloom Brands Inc.'s wholly owned subsidiary, Emblem Cannabis Corp., has successfully closed the previously announced purchase of Ayurcann.

"The successful completion of this acquisition marks an exciting milestone for Red White & Bloom," said Colby De Zen, president of Red White & Bloom Brands. "We are adding some of Canada's most recognized brands in the vape and preroll categories, a talented team, and a highly complementary operating platform that strengthens our position in one of the world's most competitive cannabis markets. We believe this transaction delivers immediate value through increased revenue and EBITDA [earnings before interest, taxes, depreciation and amortization] while also creating a powerful foundation for future growth. As we continue to expand our footprint across North America and other legal cannabis markets, we see significant opportunities to leverage the strength of the Ayurcann brands across a much broader platform. We are excited about what this means for our customers, our team and our shareholders."

With the completion of the transaction, Red White & Bloom has expanded its Canadian operating platform through the acquisition of a scaled and fully integrated cannabis manufacturing and brand portfolio. The acquired business includes the nationally recognized Fuego, Xplor, and Happy & Stoned brands, together with an active portfolio of more than 90 SKUs (stock-keeping units) distributed through approximately 2,500 retail locations across Canada, primarily within the high-growth vape and preroll categories. The acquisition also includes a Health Canada-licensed formulation, manufacturing and packaging facility in Pickering, Ont., operational inventory and equipment, established customer and supplier relationships, distribution arrangements spanning eight provinces and territories, and all licences required to continue operating the business.

The acquisition represents a significant milestone in Red White & Bloom's strategy to build a leading vertically integrated cannabis company with operations spanning Canada and the United States. Management expects the transaction to be immediately accretive to both revenue and EBITDA while enhancing the company's scale, manufacturing capabilities, product breadth and national distribution footprint. In addition, the combination is expected to generate operational synergies across cultivation, procurement, manufacturing, logistics and administration while supporting continued product innovation and new product development.

Importantly, the acquisition adds a portfolio of established consumer brands that Red White & Bloom believes can be expanded beyond their current Canadian footprint. Leveraging the company's existing operations, distribution channels and strategic relationships, management intends to pursue opportunities to introduce the Fuego, Xplor, and Happy & Stoned brands into additional markets where cannabis products may be legally produced, distributed and sold.

The company believes the combination of Ayurcann's proven brands, manufacturing expertise and national retail presence with Red White & Bloom's multijurisdictional platform creates a strong foundation for sustained growth, increased market share and long-term shareholder value creation.

Transaction summary

As previously announced, Emblem was selected as the successful bidder in the sale process approved and supervised by the Ontario Superior Court of Justice (Commercial List) in connection with the CCAA proceedings. The transaction was approved by an approval and reverse vesting order of the court in the CCAA proceedings. The transaction was structured as a share purchase, pursuant to which Emblem acquired the underlying businesses, assets, licences and operations of Ayurcann through ownership of 100 per cent of the newly issued shares of Ayurcann. In accordance with the approval and reverse vesting order, all previously issued and outstanding securities of Ayurcann were cancelled and certain of Ayurcann's assets and liabilities were excluded and vested in an affiliate of Ayurcann and were not transferred as part of the transaction.

Total consideration

Prior to closing of the transaction, Emblem assumed the debtor-in-possession (DIP) facility originally provided by Auxly Cannabis Group Inc. to Ayurcann in connection with the CCAA proceedings by paying $1,603,964 to Auxly in exchange for the assignment of all indebtedness owing by the Ayurcann entities under the original DIP facility, together with all related loan and security documents and the court-ordered DIP lender's charge (as defined in the second amended and restated initial order of the court made in the CCAA proceedings).

Total consideration for the transaction was $5,501,311, consisting of: (1) a release of all amounts outstanding under the DIP facility ($2,101,075); and (2) cash consideration of $3,400,236, financed through a combination of cash on hand and the proceeds of the DIP facility assignment, paid to Alvarez & Marsal Canada Inc., in its capacity as court-appointed monitor of the Ayurcann entities on closing.

Gowling WLG (Canada) LLP served as legal adviser to Red White & Bloom and Emblem on the transaction. Bennett Jones LLP acted as counsel to the Ayurcann entities in connection with the transaction.

About Red White & Bloom Brands Inc.

Red White & Bloom Brands is a multijurisdictional cannabis operator and house of premium brands operating in the United States, Canada and select international jurisdictions.

We seek Safe Harbor.