Mr. Zohar Krivorot reports

CANNARA ACHIEVES #1 MARKET SHARE POSITION IN QUÉBEC AS OF DECEMBER 2025 AND PROVIDES UPDATE ON QUÉBEC VAPE CATEGORY LAUNCH

Cannara Biotech Inc. has had preliminary success in the Quebec provincial vape cartridge category launch. Estimated retail sales data indicates multiple leadership positions across the nascent category (for the months November and December, 2025), with a 29.7-per-cent category share by retail sales value.

The success of the vape category launch also advanced Cannara to a No. 1 market share position by retail sales in Quebec for the month of December, 2025, with a 14.7-per-cent share of cannabis retail sales in the province, a 100-basis point improvement month over month.

"The vape cartridge category launch in our home province of Quebec has been a valuable opportunity to further expand our position as Canada's No. 1 premium vape producer. With five of the 25 total SKUs approved, we successfully positioned our business for the largest product category launch in recent Canadian cannabis history, and I am encouraged at the strong initial consumer demand for our premium vapes," said Zohar Krivorot, president and chief executive officer of Cannara.

"Our highly advanced, vertically integrated platform enabled the creation of truly premium, best-in-class products for Quebec's newly launched vape category. We are pleased to see strong reception to the launch of our first-ever rosin vape cartridge offerings, alongside our already nationally leading premium live resin vapes. We look forward to the continued consumer adoption of the category," said Nicholas Sosiak, chief financial officer of Cannara.

Cancellation and reissuance of previously granted stock options

The company also announces that, on Dec. 31, 2025, its board of directors approved the cancellation and reissuance of certain previously granted stock options to certain officers, directors and employees of the company in connection with the administration of the company's equity compensation plans. The grant of the affected options was originally announced in news releases issued by the company on Sept. 1, 2025, and Nov. 24, 2025.

The company determined that, due to an administrative oversight, the issuance of the affected options resulted in the company exceeding the limits permitted under its stock option plan and restricted share unit compensation plan, each of which is currently a rolling plan permitting the issuance of up to 10 per cent of the company's issued and outstanding common shares. The affected options were cancelled and are to be reissued on Jan. 2, 2026, with substantially the same terms and conditions, including the same exercise prices, with vesting schedules and expiry dates intended to remain unchanged and to continue as if originally granted.

A total of 544,600 stock options were cancelled and reissued, including 515,000 stock options held by directors and officers of the company. Amongst the cancelled and reissued options held by insiders of the company, 500,000 have an exercise price of $1.44 expiring on Aug. 27, 2035, and 15,000 have an exercise price of $1.80 expiring on Nov. 20, 2032. The cancellation and reissuance were undertaken solely to address the administrative oversight and did not result in any net increase of stock options outstanding under the stock option plan.

As disclosed in the company's management proxy circular dated Dec. 18, 2025, in connection with a review of the company's security-based compensation arrangements and certain housekeeping changes undertaken to align the stock option plan with governance practices applicable to senior Canadian stock exchanges, the company is seeking shareholder approval at its annual general and special meeting to be held on Jan. 29, 2026, to amend and convert the stock option plan and the RSU plan from rolling plans to fixed security-based compensation plans. The proposed amendments are intended to provide greater administrative clarity and facilitate continuing compliance with plan limits.

Following implementation of the proposed amendments, the aggregate number of listed shares issuable under both plans will be fixed at 15 per cent of the company's issued and outstanding listed shares as at the date of shareholder approval. The TSX Venture Exchange has provided conditional approval of the amended stock option plan and amended RSU plan, subject to shareholder approval. Copies of the amended plans are appended to the circular.

The circular and proxy-related materials are available on the company's website and under the company's profile on SEDAR+.

Accelerated vesting of RSUs

In addition, the company announces that, on Dec. 31, 2025, its board of directors approved the accelerated vesting of 15,000 restricted share units previously granted to the late Jack Kay, a former director and officer of the company, effective Dec. 31, 2025, to ensure compliance with the terms of the RSU plan following his passing on Nov. 8, 2025.

About Cannara Biotech Inc.

Cannara Biotech is a vertically integrated producer of affordable premium-grade cannabis and cannabis-derivative products for the Canadian markets. Cannara owns two mega facilities based in Quebec spanning over 1.65 million square feet, providing the company with 100,000 kilograms of potential annualized cultivation output. Leveraging Quebec's low electricity costs, Cannara's facilities produce premium-grade cannabis products at an affordable price.

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