Delta 9 Reports Year End and Q4 2020 Results

March 31, 2021

WINNIPEG, MB – March 31, 2021 – DELTA 9 CANNABIS INC. (TSX: DN) (OTCQX: DLTNF) (“Delta 9” or the “Company”), is pleased to announce financial and operating results for the fourth quarter and full year ending December 31, 2020.

Financial Highlights for the Year 2020

Record net revenues of $52 million in 2020, up 64% in 2020 compared to $31.8 million in 2019, including the following revenue segmentation highlights:

Retail revenue increased 109% to $32.2 million in 2020
Wholesale revenue increased 24% to $11.8 million in 2020
Business to business revenue increased 38% to $8.6 million in 2020

Gross profit1 of $17.8 million in 2020 was up 105% compared to $8.7 million last year.
Gross profit margin of 34% in 2020 compared to 27% last year.
Adjusted EBITDA² of $3.8 million in 2020 compared to an Adjusted EBITDA² (loss) of $(3.4 million) last year.
Income (Loss) from Operations of $(2.8 million) in 2020 compared to Income (Loss) from Operations of $(5.0 million) last year.
Working capital was up 18% to $22.9 million as at December 31, 2020.

Financial Highlights for Fourth Quarter of 2020

Record quarterly net revenues of $14.15 million for the fourth quarter of 2020, up 34% compared to $10.6 million for the same quarter last year.

Sequentially net revenues increased 8% for the fourth quarter of 2020 compared to $13.1 million in the third quarter of 2020.

Gross profit[1] of $4.4 million for the fourth quarter of 2020, up 132% compared to $1.9 million for the same quarter last year.

Sequentially gross profit¹ was up 11% in the fourth quarter of 2020 compared to $3.96 million in the third quarter of 2020.

Gross profit margin was 31% for the fourth quarter of 2020.
Sequentially Adjusted EBITDA[2] improved to $1.9 million in the fourth quarter of 2020 compared to and Adjusted EBITDA (loss) of $(474,039) in the third quarter of 2020.
Income (Loss) from Operations of $(2.4 million) in the fourth quarter compared to Income (Loss) from operations $(5.0 million) in the third quarter of 2020.

"Our focus on disciplined, profitable growth has paid dividends for Delta 9 as we are reporting record Adjusted EBITDA and record year over year and sequential revenue results”, said John Arbuthnot, CEO. “Delta 9 Cannabis continues to execute its vertically integrated strategy as it continues to accelerate revenue growth and implement prudent control costs. We are incredibly proud of our 300 plus employees for helping make this a record year for Delta 9.”

Summary of Quarterly Results:

Consolidated Statement of Net Income (Loss)	Q1 2020	Q2 2020	Q3 2020	Q4 2020
Revenue	$11,753,406	$13,013,610	$13,130,320	$14,149,717
Cost of Sales	6,858,370	8,394,239	9,168,026	$9,794,536
Gross Profit Before Unrealized Gain From Changes In Biological Assets	4,895,036	4,619,371	3,962,294	4,355,181
Unrealized gain from changes in fair value of biological assets (Net)	2,761,873	2,460,490	(2,338,699)	(2,717,281)
Gross Profit	$7,656,909	$7,079,861	$1,623,595	$1,637,900

Expenses
General and Administrative	3,198,840	3,676,326	4,047,063	1,600,778
Sales and Marketing	1,243,115	1,534,875	1,753,461	2,091,947
Share Based Compensation	314,231	174,779	776,705	353,798
Total Operating Expenses	$4,756,186	$5,385,980	$6,577,229	$4,046,523

Adjusted EBITDA (Loss) ¹	1,650,398	706,469	(474,039)	1,912,931
Income (Loss) from Operations	$2,900,723	$1,693,881	$(4,953,634)	$(2,408,623)
Other Income/ Expenses	(711,538)	(262,364)	(595,547)	(747,084)
Net Income (Loss)	$2,189,185	$1,431,517	$(5,549,181)	$(3,155,707)
Basic and Diluted Earnings (Loss) Per Share	$0.02	$0.01	$(0.07)	$(0.04)

Adjusted EBITDA is a non-IFRS measure, and is calculated as earnings before interest, tax, depreciation and amortization, share-based compensation expense, fair value changes and other non-cash items.

The following chart provides a breakdown of the Company's revenue by segment:

Revenue from the Sale of Cannabis	Three-month period ending December 31, 2019	Three-month period ending September 30, 2020	Three-month period ending December 31, 2020	Year ending December 31, 2019	Year ending December 31, 2020
Wholesale Cannabis Revenue	$1,448,992	$2,965,190	$4,444,106	$9,535,789	$11,838,608
Retail Cannabis Revenue	5,050,690	7,905,731	10,200,466	15,366,804	32,163,980
Medicinal Cannabis Revenue	48,911	50,743	51,859	299,657	222,356

Revenue from Other categories
B2B activities	3,793,559	1,897,690	633,946	6,226,670	8,596,120
Merchandise and cannabis devices	220,344	285,018	284,110	718,300	994,651
Marketing, Promotion and, Other	53,451	436,202	(460,442)	194,174	203,246

Sub total	$10,615,947	$13,558,574	$15,154,044	$32,341,394	$54,018,960

(Less) Excise Taxes	(30,463)	(428,254)	(1,004,327)	(575,434)	(1,971,907)

Net Revenue	$10,585,484	$13,130,320	$14,149,717	$31,765,960	$52,047,053

Discussion of Operations:

Key Performance Indicators	For the three-month period ending September 30, 2020	For the three-month period ending December 31, 2020
Production/ Wholesale Unit
Total Grams Produced	1,908,875	2,128,288
Direct Production Cost Per Gram*	$0.74	$0.67
Total Cost Per Gram**	$0.86	$0.80
Total Grams Released for Sale	1,156,012	1,417,096
Total Grams Sold (Medical and Recreational)	961,052	1,245,317
Avg Selling Price per Gram	$3.08	$3.57

Retail Unit
Total Grams Sold (Retail)	1,087,522	1,490,825
Avg Selling Price per Gram	$7.26	$5.81
Number of Transactions Processed	184,750	202,347
Avg Transaction Size	$49.62	$50.13

*Direct Production Cost per gram includes direct labour, nutrients, utilities, growing materials and supplies costs
**Total Cost per gram includes Direct Production Cost per gram plus processing labour, packaging, bottling, and labelling costs

A comprehensive discussion of Delta 9’s financial position and results of operations is provided in the Company’s Management Discussion & Analysis for the fourth quarter and year ending December 31, 2020 filed on SEDAR and can be found at www.sedar.com.

Q4 Results 2020 Conference Call
Delta 9 has scheduled a conference call to discuss the results of the fourth quarter and full year ending December 31, 2020. The conference call will be hosted April 1, 2020 at 9:00 a.m. Eastern Time by John Arbuthnot, Chief Executive Officer and Jim Lawson, Chief Financial Officer, followed by a question-and-answer period.

DATE:	April 1, 2020
TIME:	9:00 a.m. Eastern Time
DIAL IN #	1-888-886-7786
REPLAY:	1-877-674-6060 Available until 12:00 midnight Eastern Time, July 1, 2021
REPLAY PASSCODE:	641689 #

For more information contact:
Investor & Media Contact:
Ian Chadsey VP Corporate Affairs
Mobile: 204-898-7722
E-mail: ian.chadsey@delta9.ca

About Delta 9 Cannabis Inc.
Delta 9 Cannabis Inc. is a vertically integrated cannabis company focused on bringing the highest quality cannabis products to market. The company sells cannabis products through its wholesale and retail sales channels and sells its cannabis grow pods to other businesses. Delta 9's wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical and recreational cannabis 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 trade on the Toronto Stock Exchange under the symbol "DN" and on the OTCQX under the symbol "DLTNF". For more information, please visit www.delta9.ca.

Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company’s future business plans and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release include statements relating to (i) the Company’s expansion plans; and (ii) the Company’s cannabis production. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including all risk factors set forth in the annual information form of Delta 9 dated March 31, 2021 which has been filed on SEDAR. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.

[1] The Company’s “gross profit” Is calculated before adjustments for changes in biological assets.

[2] The Company’s “Adjusted EBITDA” is a measure used by management that does not have any standardized meaning prescribed by International Financial Reporting Standards and may not be comparable to similar measures presented by other companies. Management defines the Adjusted EBITDA as the income (loss) from operations, as reported, before interest and tax, adjusted for removing share-based compensation expense, depreciation and amortization, and the fair value effects of accounting for biological assets and inventories. Management believes that Adjusted EBITDA, and the attribution of Adjusted EBITDA in the manner described above, provides meaningful and useful financial information as these measures demonstrate the performance of the Company’s operating businesses.

Delta 9 Reports Year End and Q4 2020 Results

Summary of Quarterly Results:

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