C21 Investments Enters Into Definitive Agreement for the Acquisition of Phantom Farms

VANCOUVER, October 18, 2018 – PRESS RELEASE – C21 Investments Inc. has  announced that it has entered into definitive agreements for the June 18, 2018 announced acquisition of Phantom Venture Group LLC and Phantom Brands LLC (together Phantom Farms) and SDP Development Group, LLC (SDP), the owner of the real property used in the Phantom Farms business.

Phantom Farms has outdoor cannabis cultivation facilities totalling 80,000 square feet plus an additional 40,000 square feet under development in Southern Oregon. In addition, they operate a 5,600-square-foot facility which includes a wholesale distribution warehouse and an extraction laboratory, plus a 7,700-square-foot state of the art indoor grow facility in Central Oregon. SDP currently leases such property to Phantom Farms.

“Phantom Farms is a high-quality operation with a talented team producing some of the finest products in Oregon,” said Robert Cheney, president and CEO of C21 Investments. “Phantom Farms is among several successful companies set to join C21 Investments in order to make us a world-class, vertically integrated cannabis company.”

“We are excited to be part of a growing company with passionate employees who are committed to the quality of the products they produce and the communities they serve,” said Sky Pinnick, CEO of Phantom Farms. “Joining C21 Investments will enable us to expand our operations and establish our brand as a powerhouse in the global cannabis industry.” 

C21 Investments’ strategy is to acquire existing and successful cannabis operations with experienced management teams in place. C21 Investments’ focus is to expand into jurisdictions where it can wholly own indoor/outdoor cultivation operations, processing/extraction facilities, bakeries, branded products, and retail dispensaries with a large distribution network.

Terms of Phantom Farms Acquisition

The Phantom Farms acquisition is subject to prior approval of the Oregon Liquor Control Commission (OLCC) which is expected to be received in  approximately 3 months, with closing to occur following receipt of approval. On closing, C21 Investments will acquire 100 percent of Phantom Farms’ membership units.  The aggregate purchase price payable is (1) US$8,010,000 payable by the issue of 2,670,000 common shares at a deemed price of USD$3.00 per share, (2) 2,000,000 share purchase warrants of C21 Investments, with each warrant exercisable for one share at a price of CAD$1.50 per share, and (3) up to an additional 4,500,000 shares upon C21’s Oregon business achieving certain performance targets over up to a 7-year period following the closing date.  

Terms of SDP Acquisition

Closing of the acquisition of the SDP membership interests has been deferred until October 2020. Until then, Phantom Farms will continue to lease the real property from SDP at market rents. On closing, C21 Investments will acquire 100 percent of SDP’s membership units for an aggregate purchase price of US$8,010,000 payable in cash, or, at the election of the vendors, in whole or in part by the issue of 2,670,000 shares at a deemed price of USD$3.00 per share.