Mr. Edoardo Mattei reports

RED WHITE & BLOOM BRANDS EXPANDS INTO EUROPE WITH STRATEGIC CANNABIS TRANSACTION

Red White & Bloom Brands Inc. has closed a strategic transaction with Heal Botanicals Pharma Inc., pursuant to which Red White & Bloom now holds a controlling interest in Heal Europe Holdings Corp. (HEH), a newly incorporated entity established by Heal Botanicals Pharma Inc. for purposes of the transaction. HEH provides Red White & Bloom with an integrated European medical cannabis platform comprising operations and investments in Germany, the United Kingdom and other European markets.

The transaction represents a significant milestone in Red White & Bloom's international growth strategy and provides the company with exposure to established businesses spanning across pharmacy operations, pharmaceutical distribution, medical cannabis brands, patient access, fulfilment and logistics. The European platform includes the Grunhorn group of companies, which fulfilled approximately 290,000 medical cannabis prescriptions in the 12 months ended July, 2026. Collectively, the businesses comprising the European platform dispensed or distributed over 12 tonnes of medical cannabis in the same period.

The transaction gives Red White & Bloom a strategic foothold in two of Europe's largest economies and key medical cannabis markets, with established operations, infrastructure, brands, patient demand and experienced teams already in place.

Significant European market opportunity

Germany has emerged as Europe's largest regulated medical cannabis market, with demand accelerating following regulatory reforms introduced in 2024. Medical cannabis imports increased from approximately 73 tonnes in 2024 to approximately 205 tonnes in 2025, representing a year-over-year increase of approximately 176 per cent. Further, industry data indicate that Germany's pharmacy-based medical cannabis market surpassed one billion euros in annual sales in 2025.

The United Kingdom represents another significant long-term opportunity, supported by a large addressable market, importing over 30,000 kilograms of dried cannabis flower in 2025, an established private medical cannabis sector and considerable potential for continued patient adoption as awareness and access expand.

Together, entering into Germany and the United Kingdom provide Red White & Bloom with a strategic foothold across two of Europe's largest economies and key medical cannabis markets, creating opportunities to leverage established operations, brands, infrastructure and expertise as the company builds its European platform.

Management commentary

"Over the past several months, we have strengthened and repositioned Red White & Bloom through the strategic divesture of our Florida operations and expanded our Canadian platform through the recent acquisition of Ayurcann Inc.," said Colby De Zen, president of Red White & Bloom. "With the foundation of the company strengthened, we are now positioned to continue executing on our broader growth strategy. Closing this transaction marks an important milestone in that strategy and establishes a meaningful platform for Red White & Bloom's expansion into Europe. Germany has rapidly emerged as Europe's largest medical cannabis market, while the United Kingdom represents another significant and growing opportunity. Importantly, we are entering these markets with established businesses, proven operating infrastructure and experienced teams already in place. We believe this gives Red White & Bloom an exceptional foundation from which to scale, expand our presence and capitalize on the significant opportunities we see across the European market."

Grunhorn -- established German medical cannabis platform

Through the transaction, Red White & Bloom acquired a controlling economic interest in Grunhorn, an established participant in Germany's rapidly expanding medical cannabis market.

Grunhorn's operating ecosystem encompasses online medical cannabis pharmacy operations, pharmaceutical distribution and wholesale capabilities, fulfilment and logistics infrastructure, and digital patient access. These complementary capabilities provide Red White & Bloom with an established platform serving patients and health care providers throughout the German medical cannabis market.

Red White & Bloom believes Grunhorn's established market presence, infrastructure and operating capabilities provide a strong foundation from which to participate in the continued growth and development of the German market.

United Kingdom platform

Red White & Bloom's controlling interest in Leva Heal Ltd. and Zerenia Clinics Ltd., which operates a private medical cannabis clinic in the United Kingdom, provide the company with exposure to the United Kingdom's developing private medical cannabis and health care market.

The United Kingdom platform complements Grunhorn's presence in Germany and provides Red White & Bloom with an additional avenue for growth as patient access, physician awareness and acceptance of medical cannabis continue to develop.

Together, the German and U.K. businesses provide Red White & Bloom with a multimarket European platform and opportunities to share expertise, infrastructure, brands and operating capabilities across jurisdictions.

Transaction structure and ownership

On closing, Red White & Bloom acquired approximately a 62.63-per-cent controlling interest in HEH from Heal Botanicals Pharma Inc. for nominal consideration. Through HEH's ownership structure, Red White & Bloom now holds an indirect 50.1-per-cent interest in Grunhorn Gruppe AG and its underlying operating businesses, reflecting Red White & Bloom's 62.63-per-cent acquired equity interest in HEH and HEH's 80-per-cent equity interest in Grunhorn Gruppe AG.

Red White & Bloom also acquired a direct 29.82-per-cent interest in both Zerenia and Leva with Heal Botanicals Pharma Inc. continuing to hold a 19.93-per-cent direct interest, respectively. Combined with Red White & Bloom's indirect interest held through HEH, which holds 50.25 per cent of Zerenia and Leva, Red White & Bloom holds an effective interest of approximately 61.3 per cent in each of Leva and Zerenia.

The transaction therefore provides Red White & Bloom with controlling economic interests in the principal businesses comprising the European platform.

Senior secured credit facility

In order to support the European platform and its continued growth, Red White & Bloom has committed to provide HEH with a senior secured credit facility of up to a maximum principal amount of $25-million, of which an aggregate of $18.7-million has been advanced to date.

The principal terms of the facility include:

• A maximum committed principal amount of $25-million, of which $18.7-million has been advanced to date ($15.7-million advanced as of June 30, 2026, with an additional $3-million advanced on Aug. 4, 2026);
• Interest at a fixed rate of 12 per cent per annum;
• Interest during the first six months following closing (the PIK period) will be capitalized and added to the outstanding principal;
• A three-year term maturing Sept. 10, 2029, with interest following the PIK period payable from HEH's cash flow in accordance with the terms set out in the definitive financing documents;
• A senior secured position over the assets of HEH, supported by guarantees and/or security from the relevant operating subsidiaries, in each case under the applicable financing and security documents.

In addition, approximately $2.5-million of existing shareholder loans and intercompany balances will remain outstanding and be carried into HEH.

The combination of controlling equity ownership and senior secured financing provides Red White & Bloom with participation in the long-term growth of the European platform while preserving the protections and economics associated with its secured lending position.

About Red White & Bloom Brands Inc.

Red White & Bloom Brands is a publicly listed multi-jurisdictional cannabis company with operations and investments in regulated markets. The company is focused on building and acquiring leading cannabis brands and operating assets while pursuing disciplined growth through strategic acquisitions, investments and partnerships. The company is listed on the Canadian Securities Exchange under the symbol RWB.

We seek Safe Harbor.