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Kanabo Signs Agreement to Acquire Materia and Create Europe’s Largest Public Cannabis Company

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● Enables supply chain control of manufacturing and distribution through Materia’s two EU GMP certified subsidiaries

● Kanabo will have immediate access to hundreds of pharmacies across Germany

● Combined entity will commercialize new-to-market products for European patients and consumers

LONDON, July 26, 2021--(BUSINESS WIRE)--Kanabo Group Plc (LSE:KNB) ("Kanabo" or the "Company"), the first medical cannabis company to IPO on London Stock Exchange, has signed a Letter of Intent to acquire Materia, a leading processor and distributor of medical cannabis and CBD wellness products across Europe.

Kanabo’s Board of Directors (the "Board") has been actively exploring new partnerships and opportunities to accelerate Kanabo’s growth and market penetration. The Board believes that Materia’s complementary infrastructure will be crucial to expanding and strengthening Kanabo’s existing supply value chain of medical cannabis and CBD products.

Materia has an established position in the European market, with subsidiaries in Malta, Germany and the UK. Following the acquisition, Kanabo will control production, from the initial sourcing of raw materials and in-house manufacturing, all the way to distribution to pharmacies and the end consumer. This includes direct entry into Germany, whose market size was over €200M last year1, and is anticipated to remain the dominant market as the European market grows to a forecasted total size of €3.2BN by 20252

About Materia and Synergies with Kanabo

Materia’s Maltese subsidiary, Materia Malta Operating Ltd. ("Materia Malta") operates a state-of-the-art EU GMP certified facility, strategically positioned for the processing of medical cannabis flower and oils. EU GMP is considered the global gold standard for manufacturing pharmaceuticals and is a requirement for medical cannabis in most European jurisdictions. Through this facility, Materia Malta is able to import cannabis flower from its global supply network of cultivators and process it into EU GMP certified medical cannabis for subsequent export to distributors across Europe. Materia Malta also intends to utilize its facility and know-how to produce medical cannabis extracts. The facility’s current flower throughput capacity sits at a potential 6,000kg per annum, representing a possible sale value of €36M based on a blended average sales price across several key European markets.

Research conducted by Kanabo will be commercialised through Materia Malta’s facility, including formulas developed for Kanabo’s VapePod device and targeted to treat specific medical conditions such as insomnia, PTSD, neuropathic pain and anxiety.

In Germany, Europe’s largest medical cannabis market, Materia Deutschland GmbH ("Materia Germany") is a fully operational pharmaceutical wholesaler that has its EU GDP and EU GMP certificates, enabling it to import and sell medical cannabis products to German pharmacies. Materia Germany has agreements in place with numerous suppliers and has been distributing its medical cannabis portfolio to pharmacy customers for over a year.

Additionally, Materia’s UK subsidiary ("Materia UK") operates in the wellness sector as a distribution platform, selling several leading brands through Handpicked CBD, one of the UK’s largest CBD e-commerce marketplaces. Kanabo will leverage Handpicked CBD to acquire customers for its own line of CBD products and inform its future innovation pipeline.

Avihu Tamir, founder and CEO of Kanabo, said: "Materia’s unique innovative supply chain will provide strong distribution channels in the German market and offer new strategic partnerships with premium cultivators around the world.

"Together with Kanabo’s R&D and commercialization capabilities, we will be able to develop new innovative delivery methods opening up an even bigger market potential. The enlarged group will become the biggest public cannabis company in Europe and will put us in a unique position as the multi-billion pound medical cannabis market starts to accelerate."

Deepak Anand, CEO of Materia, said: "We are excited at the prospect of joining forces with Kanabo’s team. As the first medical cannabis company approved to list on the London Stock Exchange, Kanabo’s ambition to be a market leader matches our own and we believe that our combined infrastructure will generate significant value for our shareholders, partners, customers and patients."

The acquisition will enable Kanabo to build upon the significant progress made this year. This includes a supply agreement with Greek cultivation facility Hellenic Dynamic, a new EU GMP production line in partnership with Pure Origin and a first-of-its-kind production line deal with PharmaCann for VapePod cartridges. The Company also recently announced an expansion of its partnership with The LYPHE Group, facilitating the delivery of Kanabo’s medicinal cannabis formula to the UK this month In addition, Kanabo has announced MP Dr Daniel Poulter as a Non-Executive Director to support its mission to establish and lead a regulated medicinal cannabis market in the UK and Europe.

End Notes

1 GKV-Spitzenverband (German National Association of Statutory Health Insurance Funds), plus estimate of private prescriptions.

2 Prohibition Partners, 2021. "The European Cannabis Report: Edition 6".

About Kanabo Group Plc

Kanabo is creating a new standard in the medical cannabis industry by building an ecosystem that improves the well-being of millions around the world by providing an alternative solution to the smoking of medicinal cannabis flowers. With a focus on the distribution of cannabis-derived products for medical patients, and non-THC products for CBD consumers, Kanabo has conducted extensive Research & Development in order to produce high-quality cannabis extract formulas, innovative medical-grade vaporizers, and various non-smoking consumption solutions.

About Materia

Materia is a leading independent processor and distributor of medical cannabis and CBD wellness products. Materia has developed a robust EU-GMP manufacturing and distribution ecosystem to grow the legal cannabinoid market across Europe. With its research-driven team and regulatory expertise, Materia focuses on the high-margin downstream activities of processing, formulation and distribution into markets wherever there is a patient in need of cannabis medicine or CBD consumers seeking innovative new products.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210726005287/en/

Contacts

Kanabo:
Michelle Tamir, Marketing Manager
press@kanabogroup.com

Materia:
Deepak Anand, CEO
investors@materiaventures.com

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