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Harvest Completes US$100 Million First Tranche of US$500 Million Convertible Debenture Financing

May 13, 2019

PHOENIX--(BUSINESS WIRE)--May 13, 2019--Harvest Health & Recreation, Inc. ( CSE: HARV, OTCQX: HRVSF ) (“ Harvest ” or the “ Company ”), a vertically integrated cannabis company with one of the largest and deepest footprints in the U.S., is pleased to announce that it has closed the first tranche of its previously announced brokered private placement of 7% unsecured convertible debentures (the “ Convertible Debentures ”) of the Company, at a price of US$1,000 per Convertible Debenture (the “ Issue Price ”) for gross proceeds of US$100,000,000. Eight Capital is acting as agent for the offering. The Company intends to use the net proceeds of the offering to fund working capital and general corporate purposes.

The Convertible Debentures have a maturity date (the “ Maturity Date ”) of May 9, 2022 and bear interest from the date of issue at 7.0% per annum, payable semi-annually on June 30 and December 30 of each year. The Convertible Debentures are convertible, at the option of the holder, into subordinate voting shares of the Company (“ Subordinate Voting Shares ”) at any time prior to the close of business on the last business day immediately preceding the Maturity Date. The Convertible Debentures have a conversion price of US$11.4198723 (the USD equivalent of CDN$15.378, based on the Bank of Canada CAD/USD exchange rate as of May 8, 2019) per Subordinate Voting Share (the “ Conversion Price ”). The purchaser of the Convertible Debentures also received, for no additional consideration, 3,502,666 warrants (the “Warrants ”). Each Warrant is exercisable to purchase one Subordinate Voting Share at an exercise price of CDN$18.17 per share, for a period of 36 months from the date of issue.

“Our vision is to become the most valuable cannabis company in the world and this transaction will help fuel Harvest’s growth,” said Harvest CEO Steve White. “This is a particularly acquisitive time in the industry and access to significant capital with favorable terms is crucial to long-term success.”

The Company may, subject to certain conditions, force the conversion of all of the principal amount of the then outstanding Convertible Debentures at the applicable Conversion Price if, at any time after the date that is four months and one day following the date of issue of the Convertible Debentures, the daily volume weighted average trading price (the “ VWAP ”) of the Subordinate Voting Shares is greater than CDN$21.53 for any 10 consecutive trading days, by providing 30 days’ notice of such conversion.

The Convertible Debentures, the Warrants and the Subordinate Voting Shares underlying both, are subject to a statutory hold period which expires on September 11, 2019, being four months and one day following the date of issue of the Convertible Debentures.

The Company has also entered into an investment agreement with an institutional investor and an Agency Agreement with Eight Capital, pursuant to which Eight Capital has agreed to offer for sale, and the institutional investor has agreed, subject to certain terms and conditions customary for a transaction of this nature, to purchase up to 4 additional tranches of 100,000 convertible debentures (the “ Additional Debentures ”) at the Issue Price, for additional gross proceeds of up to US$400,000,000 (the “ Additional Offering ”), on the terms described in Harvest’s press release dated April 4, 2019. There can be no assurances that any Additional Debentures will be issued as proposed or at all.

About Harvest Health & Recreation, Inc.

Headquartered in Tempe, Arizona, Harvest Health & Recreation Inc. is a multi-state cannabis operator (MSO) and vertically-integrated cannabis company. Subject to completion of announced acquisitions, Harvest will have the largest footprint in the U.S., with rights to 219 facilities, of which 142 are retail locations and more than 1,580 employees across 17 states. Since 2011, the company has been committed to aggressively expanding its Harvest House of Cannabis retail and wholesale presence throughout the U.S., acquiring, creating and growing leading brands for patients and consumers nationally and continuing on a path of profitable growth. Harvest’s mission is to improve lives through the goodness of cannabis and is focused on its vision to become the most valuable cannabis company in the world. We hope you’ll join us on our journey:  https://harvestinc.com .

Forward-looking Statements

This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of Harvest with respect to future business activities. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding the completion of the offering or any tranche of the offering.

Investors are cautioned that forward-looking information is not based on historical facts but instead reflects Harvest management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although Harvest believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined Company. This forward-looking information may be affected by risks and uncertainties in the business of Harvest and market conditions.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although Harvest has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Harvest does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190513005472/en/

CONTACT: Alex Howe, Head of Corporate Communications

ahowe@harvestinc.com

202-271-7997

KEYWORD: UNITED STATES NORTH AMERICA CANADA ARIZONA

INDUSTRY KEYWORD: HEALTH ALTERNATIVE MEDICINE NATURAL RESOURCES AGRICULTURE RETAIL TOBACCO

SOURCE: Harvest Health & Recreation, Inc.

Copyright Business Wire 2019.

PUB: 05/13/2019 09:27 AM/DISC: 05/13/2019 09:27 AM

http://www.businesswire.com/news/home/20190513005472/en