Mr. Oren Shuster reports

IMCC ADDRESSES ACCELERATED GROWTH IN GERMANY THROUGH NEW SUPPLY AGREEMENT WITH EU-GMP CERTIFIED GLASSHOUSE BOTANICS AND ANNOUNCES A CHANGE TO ITS BOARD OF DIRECTORS

IM Cannabis Corp. is experiencing accelerated growth in Germany after the April 1 partial legalization, further to the company's press release dated March 25, 2024. Adjupharm GmbH, IM Cannabis's German subsidiary, is supporting its growth by further bolstering its supply chain with an additional EU-GMP (European Union good manufacturing practice) supplier -- GlassHouse Botanics Inc., headquartered in Whitewater, Ont.

The April 1 partial legalization of cannabis in Germany has potentially paved the way for tremendous category growth. With a population of over 83 million, Germany has more than double the population of California, which had a cannabis industry of about $5-billion in 2023. Until the social clubs are up and running, the only legal way to buy cannabis in Germany is with a prescription, driving significant growth in the medical market.

"While is impossible to say how big the opportunity in Germany will be, if we assume a 1-per-cent penetration and an average spend of $200/month, the German market could have a potential run rate of approximately $2-billion by the end of 2025," pointed out Oren Shuster, chief executive officer of IM Cannabis.

IMC Germany spent 2023 preparing for the legalization by putting the processes in place to drive accelerated growth, while focusing on active cost management with the goal of achieving sustainable profitability. In 2023, IMC Germany delivered 182-per-cent growth, outperforming the market by 162 per cent, closing the year as a strong No. 6 among the cannabis distributors and ranked No. 1 in sales per SKU (stock-keeping unit).

"I am extremely proud of the work the team did in 2023, our singular focus built the foundation we are now using to drive accelerated growth," said Richard Balla, chief executive officer of IMC Germany. "Since the April 1 legalization, we immediately started to see an increase in the demand. Our sales from April through the end of May have increased by over 160 per cent versus the average sales of the last six months before legalization. The medical cannabis market clearly is evolving, however, it is too early to assess the mid-to-long-term effect. What has become clear though, is the importance of a consistent, reliable supply chain. It needs to be able to match the pace of the rapidly growing market."

All cannabis flowers that are sold through pharmacies must come from an EU-GMP facility. Of all the licensed Canadian cannabis producers, fewer than 20 are EU-GMP certified, making this one of the primary supply chain bottle necks, limiting the ability of German medical cannabis distributors to import product from Canada. IMC Germany is able to build a more robust, exclusive supply chain by having the necessary certifications and qualified personnel to preform EU-GMP third country inspections for qualified cannabis producers. GlassHouse Botanics is a privately held Canadian corporation in the business of cultivating and processing pharmaceutical-grade medical cannabis flower. Through its partnership with IMC Germany, it received its EU-GMP certification.

"One of our key objectives is to make sure that our supply chain is strong enough to meet the demand," commented Mr. Shuster. "Our ability to perform EU-GMP third country inspections for licensed cannabis growers is a fundamental part of the strategy. We are delighted to have exclusively launched GlassHouse Botanics' first strain and have already started the EU-GMP audit process with additional licensed growers, further supporting our supply strategy."

"GlassHouse Botanics was built on the premise to create a highly efficient, state-of-the-art facility, custom-made for EU-GMP certification," said Jeff Black, chief executive officer and founder of GlassHouse Botanics. "Through our EU-GMP certification, we can now focus on ramping up production to supply the growing demand in the German medical cannabis market."

Change to board of directors

In addition, IM Cannabis announces today that Marc Lustig will be stepping down as director of the company and as chairman of the board of directors, effective immediately.

The board of directors has appointed Mr. Shuster, currently a director and CEO of IM Cannabis, as the new chairman of the board of directors of IM.

"The board of directors would like to thank Marc for his steadfast dedication and contributions to IMC during his tenure as chairman of the board," said Mr. Shuster.

"I believe the chairman role will be in better hands with Oren, who can fully dedicate his focus to it. It has been a pleasure to serve as the chairman of the board of the company over the past few years and I believe IMC has persevered through a very challenging environment but is now positioned to excel," said Mr. Lustig.

About IM Cannabis Corp.

IM Cannabis is an international cannabis company that provides premium cannabis products to medical patients in Israel and Germany, two of the largest medical cannabis markets, with a focus of achieving sustainable and profitable growth. The company leverages a transnational ecosystem powered by a unique data-driven approach and a globally sourced product supply chain. With an unwavering commitment to responsible growth and compliance with the strictest regulatory environments, the company strives to amplify its commercial and brand power to become a global high-quality cannabis player.

The IM Cannabis ecosystem operates in Israel through its commercial relationship with Focus Medical Herbs Ltd., which imports and distributes cannabis to medical patients, leveraging years of proprietary data and patient insights. The company also operates medical cannabis retail pharmacies, on-line platforms, distribution centres and logistical hubs in Israel that enable the safe delivery and quality control of IM Cannabis products throughout the entire value chain. In Germany, the IM ecosystem operates through Adjupharm GmbH, where it distributes cannabis to pharmacies for medical cannabis patients.

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