Delta 9 Reports Year End and Q4 2019 Results

WINNIPEG, MB – March 19, 2020 – DELTA 9 CANNABIS INC. (TSX: DN) (OTCQX: VRNDF) (“Delta 9” or the “Company”), is pleased to announce financial and operating results for the fourth quarter and full year ending December 31, 2019.

Financial Highlights for the Year 2019

• Record operating revenues of $31.8 million in 2019, up 315% in 2019 compared to $7.6 million for the same period last year, including:
• Retail revenue up 390% to $15.4 million in 2019
• Wholesale revenue up 336% to $9.5 million in 2019
• Business to business revenue up 574% to $6.2 million in 2019
• Gross profit1 of $10.0 million in 2019 was up 399% compared to $2.0 million last year.
• Gross profit margin was 32% for the full year of 2019 compared to 27% last year.
• Working capital was $22.8 million as at December 31, 2019.

Financial Highlights for Fourth Quarter of 2019

• Operating revenues of $10.6 million for the fourth quarter of 2019, up 101% compared to $5.3 million for the same quarter last year.
• Sequentially net revenues increased 59% for the fourth quarter of 2019 compared to $6.7 million in the third quarter of 2019.
• Gross profit[1] of $3.2 million for the fourth quarter of 2019, up 157% compared to $1.2 million for the same quarter last year.
• Sequentially gross profit was up 59% in the fourth quarter of 2019 compared to $2.0 million in the third quarter of 2019.
• Gross profit margin was 31% for the fourth quarter of 2019.
• Sequentially Adjusted EBITDA[2] (loss) improved 89% to $(91,760) in the fourth quarter of 2019 compared to $(849,760) in the third quarter of 2019.
• Profit from Operations was $481,121 in the fourth quarter compared to a loss from operations $(625,072) in the third quarter of 2019.

“We are pleased with our record year over year and sequential revenue results”, said John Arbuthnot, CEO. “We have seen a significant increase in sequential quarterly revenue with a strong performance in our retail and business to business segments. We believe that given the relative novelty and uncertainty of the global cannabis industry, that our diversified revenue strategy and vertical integration approaches will allow us to better react to market challenges than our competitors with single business strategies. Most notably the Company achieved its first quarterly profit from operations in the Company’s history in the fourth quarter of 2019”

2019 Operational Highlights

• Delta 9 received an extract sales authorization from Health Canada to sell cannabis extracts, cannabis topicals, and edible cannabis products as defined under the Cannabis Regulations (Canada). As a result of this authorization, Delta 9 plans to sell nine (9) new derivative cannabis products in 2020.  
• Delta 9 received Health Canada approval to place 95 new Grow Pods from its Phase II expansion of its production facility into service. This increased production capacity by an estimated 56% and brought the total number of Grow Pods licensed and approved by Health Canada in service to 297. These additional Grow Pods are anticipated to add approximately 2,975 kilograms in dried cannabis flower production per year, bringing Delta 9’s overall anticipated production capacity of dried cannabis to approximately 8,325 kilograms per year.
• Delta 9 entered into a definitive agreement to acquire two Alberta retail cannabis stores. Following completion of this acquisition the company will have a total of six operating retail stores in Western Canada. The Company continues to implement its strategy of establishing a chain of Delta 9 branded retail stores across Canada. Delta 9’s goal is to add an additional 12 retail stores over the next 24 months.
• After successfully passing all inspections, Delta 9 received a renewal of its cannabis cultivation license for a three-year term after fulfilling Health Canada's rigorous specifications.
• Delta 9 received approval to list its securities on the Toronto Stock Exchange (“TSX”) under the symbol “DN”. With the increased visibility that trading on the TSX provides to the retail and institutional investor base, the up listing will help to increase trading liquidity and provide access a growing investor base interested in the cannabis industry.  
• Delta 9 closed a $11.8 million public offering of convertible debenture units (“Debenture Units”). Each Debenture Unit consisted of one unsecured convertible debenture in the principal amount of $1,000 (a “Debenture”) and 826 common share purchase warrants. The Debentures bear interest at the rate of 8.5% per year for a three-year term.
• Delta 9 has supply agreements in place with Manitoba, Saskatchewan, Alberta, and British Columbia and is currently in active negotiations with provincial regulators and wholesalers in Ontario and the rest of Eastern Canada to secure additional distribution markets. Delta 9’s strategy is to become a national distributor of high-quality cannabis products across Canada.

[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.