IM Cannabis Releases Message from CEO and 2021 Outlook

https://www.accesswire.com/623956/IM-Cannabis-Releases-Message-from-CEO-and-2021-Outlook

TORONTO, ON and GLIL YAM, ISRAEL / ACCESSWIRE / January 12, 2021 / IM Cannabis Corp. (the "Company" or "IMC") (CSE:IMCC), a multi-country operator ("MCO") in the medical cannabis sector with operations in Israel and across Europe, is pleased to release a message from its Chief Executive Officer, Oren Shuster.

Message to Shareholders

Dear Shareholders,

2020 was an exceptional year for IMC and I am delighted to share that the Company is in a better position than ever to execute on its international expansion plans.

Two weeks ago, we announced a definitive agreement for the proposed acquisition (the "Trichome Transaction") of Trichome Financial Corp. (CSE:TFC, "Trichome"). Once completed, we will be the only MCO with established direct operations in Israel, the EU and Canada. Furthermore, not only do we expect the Trichome Transaction to expand our global platform to include the Canadian adult-use recreational cannabis market, but it would also secure the supply of premium cannabis from an indoor cultivation facility, which we believe is in high demand in both Israel and Europe. As well, the Company expects to benefit from the exceptionally talented Trichome team who collectively have expertise in cultivation, sales, marketing, restructuring, mergers and acquisitions. We believe that this team will assist us in executing an M&A strategy in North America with the goal of firmly establishing IMC globally over the long-term. The Trichome Transaction is expected to close in the first half of 2021 and was approved with the unanimous support of both IMC's board of directors (other than Marc Lustig who, as a director of both IMC and Trichome declared his conflict and abstained from voting in accordance with applicable law), as well as the independent directors of Trichome, who have also recommended that Trichome shareholders approve the Trichome Transaction at an upcoming special meeting of Trichome shareholders. For further details concerning the Trichome Transaction, including strategic and financial transaction highlights, please refer to the joint news release of IMC and Trichome dated December 30, 2020, a copy of which is filed on our SEDAR profile at www.sedar.com.

While the Trichome Transaction is our most recent milestone, it comes at the end of a prosperous year during which our team successfully made a number of significant accomplishments. In Israel, six pharmacy sales agreements were signed by Focus Medical Herbs Ltd. ("Focus Medical") to bring IMC-branded medical cannabis to over 100 pharmacies across Israel. We began deliveries pursuant to these pharmacy sales agreements in Q2 2020 and shipments have accelerated since then. In Germany, we have established a national distribution network with ten distribution partners selling IMC-branded products in German pharmacies and we have expanded our internal sales team accordingly. We continue our focus on building physician awareness and engagement with our brand to drive sales in the German market.

These milestones would not be as meaningful if they did not translate into financial results. In Q3 2020, we reported a 57% sequential increase to consolidated revenues and achieved consolidated positive adjusted EBITDA for the first time. We believe that the completion of the Trichome Transaction will support our expectation to maintain consolidated positive adjusted EBITDA in 2021, as both IMC and Trichome share a similar high growth profile and financial discipline.

We expect that we will continue to drive shareholder value with conviction in our long-term strategy throughout 2021. We believe our efforts to list on the NASDAQ Capital Market ("NASDAQ") are on track to be finalized in Q1 2021 and, in order to continue investing in our North American growth, we are delighted that Marc Lustig has taken on the role of Executive Chairman of IMC. As we are seeing global cannabis markets become more accommodative, we continue to see many organic growth and acquisition opportunities in Israel, Europe and North America. We are confident that we have the right team in place to take advantage of these opportunities.

We extend our sincere thanks to you, our shareholders and industry colleagues, for your continued support of IMC.

Sincerely,

Oren Shuster

Israeli Market Update

We believe that the industry landscape in Israel remains very supportive of the continued growth of IMC.

On the regulatory front, a government committee responsible for advancing cannabis market reform published a report (the "Report") concluding that it supports and recommends the legalization of adult-use recreational cannabis in the State of Israel. Based on the Report, the Israeli Ministry of Justice is expected to formulate a bill to begin the legislative process towards the legalization of adult-use recreational cannabis. The government committee made its recommendation for legalization based on the increasing demand for adult-use recreational cannabis in Israel.

We are also seeing increasing demand in Israel through a significant increase in patient count. Data recently published by the Israeli Medical Cannabis Association indicates that there are currently over 77,000 medical cannabis patients in Israel, which represents over 100% growth in the last two years. The Israeli market is unique in that black market prices are higher than medical cannabis prices, a dynamic which remains very positive for legal market participants like IMC.

In the first half of 2020, Focus Medical signed six binding sales agreements for the distribution of IMC-branded products with leading pharmacies in Israel. To date, IMC-branded products are being sold in over 100 pharmacies in Israel. Total consolidated revenue from all binding sales agreements in Israel is expected to be approximately $193.5 million with an expected gross margin of 50% over the next three years.

During 2020, Focus Medical also signed several supply agreements with Israeli-licensed cannabis producers to increase its cultivation capacity to meet the growing demand for IMC products in the Israeli market.

European Market Update

Adjupharm GmbH ("Adjupharm"), IMC's German-based subsidiary, fully established our distribution platform in Germany in 2020. Adjupharm, an EU-GMP certified distributor, has ten distributors currently selling IMC-branded products to German pharmacies, all of which signed binding commitments in 2020.

In Q3 2020, IMC disclosed that in partnership with a local Dutch partner, IMC Holland B.V. ("IMC Netherlands") submitted an application to participate in the Dutch government's controlled cannabis supply chain license tender. IMC Netherlands advanced throughout the regulatory review process but was unfortunately not awarded a license. Our team is in active discussions to partner with a successful license applicant and we believe there are many benefits IMC can offer to such potential partners.

Corporate Update

In December 2020, our shareholders approved a special resolution for the consolidation of the Company's common shares, if, as and when determined by IMC's board of directors (the "Share Consolidation"). If implemented, the Share Consolidation will increase the Company's common share price to meet the minimum share price requirements for the proposed listing on NASDAQ.

Management Changes

Concurrent with the announcement of the proposed Trichome Transaction, we announced the strengthening of our management team with the appointment of Marc Lustig to the position of Executive Chairman. Mr. Lustig has been working very closely with the executive team on our North American acquisition and capital markets strategy. Upon the successful completion of the Trichome Transaction, we believe that the timing will be right for IMC to establish a leadership presence in this very developed cannabis market.

In addition, the Company announces that Yaron Berger and Focus Medical have mutually decided to part ways. Mr. Berger served as CEO of Focus Medical's Israeli operation since January 2020. The Company and Focus Medical thank Mr. Berger for his efforts and wishes him well in his future endeavors.

About IM Cannabis Corp.

IMC is an MCO in the medical cannabis sector with operations in Israel and Germany. Over the past decade, IMC has built its brand as a provider of premium medical cannabis products in the Israeli market. The Company has also expanded its business to offer intellectual property related services to the medical cannabis industry.

In Europe, IMC operates through a German-based subsidiary and EU-GMP certified medical cannabis distributor-Adjupharm. IMC's European presence is also augmented by strategic alliances with various pan-European EU-GMP cultivators and distributors with the objective of capitalizing on the increased demand for medical cannabis products in Europe and bringing the IMC brand and its product portfolio to European patients.

IMC partners with renowned academic institutions and scientists, as well as allocates resources and investments for the development of innovative technologies in order to improve the lives of medical cannabis users around the world.

About Focus Medical Herbs Ltd.

Focus Medical is one of eight original licensed producers of medical cannabis in Israel and has over 10 years of experience growing high quality medical cannabis in the Israeli market. Focus Medical has an exclusive commercial agreement with IMC to distribute its products under the IMC brand. In addition to its own capacity, Focus Medical has supply agreements with four other cultivators for additional medical cannabis supply using its proprietary genetics and for sale under the IMC brand.