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Delta 9 Update on Expansion Plans

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WINNIPEG, Oct. 26, 2018 /CNW/ – DELTA 9 CANNABIS INC. (TSXV: NINE) (OTC: VRNDF) (“Delta 9” or the “Company”) is pleased to announce its production and extraction plans for 2019 as well as a status update regarding its current operational expansion. Specifically, Delta 9 wishes to announce: (i) that the Phase 1 development of Delta 9’s grow facility in Winnipeg, Manitoba will be completed ahead of schedule, and significantly below budget; (ii) Delta 9’s plans for the Phase 2 development of its Winnipeg grow facility; (iii) Delta 9’s acquisition of land for its planned ‘Delta 9 Cannabis Campus’ in Winnipeg; and (iv) the anticipated schedule for the opening of the Delta West extracted products and product development facility in Calgary, Alberta.

Delta 9 Grow Facility – Phase 1

Delta 9 CEO John Arbuthnot announced today that the planned Phase I development at its grow facility in Winnipeg is expected to be completed on or before November 7, 2018 at a total estimated cost of $4,312,000, which is approximately 30 per cent below its original budgeted estimate. The Delta 9 grow facility uses proprietary grow pods for producing cannabis. Each grow pod is constructed from a repurposed 320 square foot steel shipping container and can produce approximately 32.5 kilograms of cannabis annually.

The Phase 1 development of the Winnipeg grow facility covers approximately 40,000 square feet with grow pods stacked two high. The following grow pods will be located in this area of the facility:

Utility/Support: 20 support pods with a total area of 6,400 square feet. These pods will be used for housing cannabis genetic products and vegetative plant growth as well as facilities such as processing, packaging, labeling, two laboratories, a wash area, and storage.

Flowering Pods: 134 grow pods with a total area of 42,880 square feet. These grow pods will house flowering cannabis plants.

Once the Phase 1 development of the Winnipeg grow facility is complete, there will be a total of 154 grow pods, offering 49,280 square feet of production space, and estimated production capacity of 4,288 kilograms of cannabis annually. Delta 9 aims to certify the facility under the European Good Manufacturing Practices (“EU GMP”) standard in order to be able to export cannabis products to the European Union.

“This project was not expected to be complete until the end of this year, but the Delta 9 grow pods we’ve designed have turned out to be even more efficient than we expected,” said Arbuthnot. “We are now able to expand very quickly, and at a very low capital cost as compared to our competitors in the industry. Each grow pod costs approximately $26,000 fully installed, and can produce approximately $325,000 per year in revenue, assuming a retail price of $10 per gram of cannabis.”

Delta 9 Grow Facility – Phase 2

The area of Delta 9’s grow facility in Winnipeg containing the Phase 2 development is approximately 40,000 square feet in size and can also house two stories of grow pods. Delta 9 estimates that there will be a total of 154 grow pods contained in this area of the facility when it is completed. Delta 9 estimates that this area of the facility will be completed in the second quarter of 2019 at a cost of approximately $4,312,000. Once completed, this area of the facility is expected to produce up to an additional 4,288 kilograms of cannabis annually. The following grow pods will be located in this Phase 2 area:

Utility/Support: 20 support pods with a total area of 6,400 square feet. These pods will be used for housing cannabis genetic products and vegetative plant growth as well as facilities such as processing, packaging, labeling, two laboratories, a wash area, and storage.

Flowering Pods: 134 grow pods with a total area of 42,880 square feet. These grow pods will house flowering cannabis plants.

The Delta West Facility – Phase 1

Delta 9 and Westleaf Cannabis Inc. (“Westleaf”) have formed a 50/50 joint venture partnership to build and operate a state-of-the-art cannabis extract, testing and research and development laboratory to develop and manufacture diversified and derivative cannabis products, pending approval of such products by the federal government. The facility is located in Calgary, Alberta and has a total area of 60,700 square feet. The Phase 1 development of this facility will occupy approximately 15,800 square feet.

The Phase 1 development will include a research and development facility, a processing lab, a manufacturing plant, and an order fulfillment centre, all built to the EU GMP standard in order to access international export markets. The facility will be designed by a North American leader in the design and construction of super critical carbon dioxide extraction operations.

Numerous types of cannabis products have been created or are under development in this facility at this time, in what the Company projects will be one of the largest cannabis oil extraction and extract manufacturing facilities in Canada. The production license application for the Delta West facility was submitted to Health Canada in August, 2018 and construction began in September, 2018. The Company expects a cannabis processing license will be awarded in the second quarter of 2019.

“Our goal is to become one of the world’s foremost producers of innovative cannabis derivatives,” said Scott Hurd, CEO and President of Westleaf. “This project is designed to support cutting edge research and development, which will result in the production of high quality products that serve an increasingly sophisticated clientele and produce higher margins than dried cannabis.”

Delta West Facility – Phase 2

The second phase of the development of the Delta West facility is designed to significantly increase the capacity of the facility and to produce a wide variety of new derivative product lines, including concentrates, vape cartridges, edibles, and beverages, once these types of products are permitted for production and sale under Canadian regulations. Phase 2 of the Delta West facility is estimated to have a total area of approximately 44,900 square feet.

Winnipeg Expansion Facilities:

On October 11, 2018 the Company announced that it has closed its previously announced acquisition of the land and the 80,000 square foot building containing the Company’s current cannabis production facility from 6599362 Canada Ltd. for $6,250,000. Management is currently planning multiple expansion facilities on the Winnipeg site which will utilize the Delta 9 grow pod system. Delta 9 is planning to expand its annual cannabis production capacity to 17,500 kilograms by the end of 2019. Further expansion is planned on a “Delta 9 Cannabis Campus” slated for construction on an adjoining parcel of industrial land.

Retail Operations

Delta 9, through its subsidiary Delta 9 Lifestyle Cannabis Clinic Inc., has opened its first retail cannabis store in Winnipeg, Manitoba. This store is expected to be part of a network of retail outlets under the Delta 9 Cannabis Store brand. The 3,200 square foot cannabis super store opened on October 17, 2018, and logged more than 9,000 separate purchases of cannabis and accessories in the first six days of operations.

The Company is currently building three more retail outlets in Winnipeg, Thompson and Brandon Manitoba, and has partnered with a Manitoba First Nation to open a fifth store. Additionally, the Company has prequalified for the Manitoba government’s request for proposals to build additional ‘micro stores’ in smaller, rural communities.

On behalf of the Board of Directors of the Company
John Arbuthnot, CEO and Director, Delta 9 Cannabis Inc.

About Delta 9 Cannabis Inc.
Delta 9 was the fourth producer in Canada licensed to produce legal cannabis. Delta 9 now operates its wholly-owned subsidiary, Delta 9 Bio-Tech Inc., as 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 also owns 50 per cent of the 60,000 square foot Delta West facility in Alberta, and co-owns the Delta Nine Cannabis Store retail network. Delta 9’s shares trade on the TSX Venture Exchange under the symbol “NINE” and on the OTC under the symbol VRNDF.

About Westleaf Cannabis Inc.
Westleaf is a private vertically integrated cannabis company focused on innovative retail experiences, engaging cannabis brands, and premium cannabis production. Westleaf is headquartered in Calgary, Alberta. Since incorporation, Westleaf has used its funds to execute its vertically integrated business plan, which includes applying for prospective cannabis retail locations in privatized markets across Canada, developing an extraction and processing facility in Calgary, Alberta and developing a large scale indoor cannabis cultivation facility located in Battleford, Saskatchewan. Westleaf is developing a national retail footprint for its retail concept “Prairie Records”, which leverages the instinctual tie of recreational cannabis and music and redefines the cannabis purchasing experience. For more information, please visit www.westleaf.com.

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.

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. Often, but not always, forward-looking statements and information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward looking statements in this news release include statements relating to: (i) the expansion plans of Delta 9 and Delta West, including construction of new facilities and retail expansion; (ii) Delta 9 and Delta West’s production of cannabis and cannabis products; (iii) Delta 9 and Delta West’s development of new cannabis products; and (iv) the grant of a cannabis processing license to Delta West. 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 those risk factors set forth in the annual information form of Delta 9 dated May 31, 2018 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.

SOURCE Delta 9 Cannabis Inc.

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