Delta 9 Announces Closing of $11.8 Million Public Offering of Convertible Debenture Units

WINNIPEG, Manitoba, July 17, 2019 – Delta 9 Cannabis Inc. (“Delta 9” or the “Company”) (TSXV: NINE) (OTCQX: VRNDF) is pleased to announce the closing (the “Closing”) of its previously announced public offering (the “Offering”) of convertible debenture units of the Company (the “Debenture Units”) for aggregate gross proceeds of $11,800,000. The Offering was led by Mackie Research Capital Corporation and Canaccord Genuity Corp. (together, the “Agents”).

The net proceeds received by Delta 9 from the Offering will be used for capital expenditures related to the expansion of Delta 9’s production facility, capital expenditures relating to new retail cannabis stores and for general corporate and working capital purposes.

“Closing of this debenture financing allows Delta 9 to continue to expand on our vertically integrated business model” said John Arbuthnot, CEO of Delta 9. “Our diversified revenue model has demonstrated success over the first eight months of legalization. We will feel confident that our continued focus on execution will create value for our shareholders over the long term.”

Each Debenture Unit consists of one $1,000 principal amount of 8.5% unsecured convertible debenture (the “Convertible Debentures”) maturing three years from the date of issuance and 826 common share purchase warrants of the Company (the “Warrants”). The Convertible Debentures shall bear interest at a rate of 8.5% per annum from the date of issue, payable semi-annually in arrears on the last day of June and December in each year and will mature 36 months from the date of issuance (the “Maturity Date”). The principal amount of each Convertible Debenture is convertible, for no additional consideration, into common shares of the Company (“Common Shares”) at the option of the holder at any time prior to the earlier of: (i) the close of business on the Maturity Date; and (ii) the business day immediately preceding the date specified by the Company for redemption of the Convertible Debentures upon a change of control at a conversion price equal to $1.21 (the “Conversion Price”), subject to certain adjustment and acceleration provisions. 

Each Warrant entitles the holder thereof to purchase one Common Share at an exercise price of $1.33 at any time up to 36 months following Closing. Provided that if, at any time prior to the expiry date of the Warrants, the volume weighted average trading price of the Common Shares on the TSX Venture Exchange (“TSXV”) is greater than $2.33 for 20 consecutive trading days, the Company may, within 10 business days of the occurrence of such event, deliver a notice to the holders of Warrants accelerating the expiry date of the Warrants to the date that is 30 days following the date of such notice (the “Accelerated Exercise Period”). Any unexercised Warrants shall automatically expire at the end of the Accelerated Exercise Period.

Pursuant to the terms of the Agency Agreement, the Company paid the Agents a cash commission equal to 7.0% of the gross proceeds of the Offering, and issued to the Agents 682,276 non-transferable warrants (the “Broker Warrants”) of the Company, with each Broker Warrant exercisable, for a period of 36 months from the date of Closing, into a Common Share at an exercise price equal to the Conversion Price.

The Offering is subject to the final approval of the TSXV. The TSXV has conditionally approved the Offering and the listing of the Convertible Debentures and Warrants. It is expected that the Convertible Debentures and Warrants will commence trading on the TSXV within two or three trading days under the trading symbols “DN.DB” and “DN.WT.A”, respectively. On the same date, the trading symbol for the Common Shares will change from “NINE” to “DN” and the trading symbol for Delta 9’s existing listed warrants will change from “NINE.WT” to “DN.WT”.

The Offering was made pursuant to a short-form prospectus filed in each of the provinces of Canada (except Québec), and otherwise by private placement exemption in those jurisdictions where the Offering can lawfully be made, including the United States.  Neither the Debentures Units (and the Convertible Debentures and the Warrants forming part of the Debenture Units) have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and such securities may therefore not be offered or sold in the United States or to or for the account or benefit of a person in the United States or a U.S. Person (as defined in Regulation S of the U.S. Securities Act) absent registration or an exemption from the registration requirements of the U.S. Securities Act and in accordance with applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Debenture Units in any jurisdiction in which such offer, solicitation or sale would be unlawful. A copy of the short form prospectus dated July 8, 2019 is available under the Company’s profile on SEDAR at www.sedar.com.

About Delta 9:

Delta 9 Cannabis is a vertically integrated cannabis company focused on bringing the highest quality cannabis products to market. Delta 9's wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical marijuana pursuant to the ACMPR and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9's shares currently trade on the TSX Venture Exchange under the symbol "NINE" and on the OTC under the symbol VRNDF.

For more information, please visit delta9.ca

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Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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