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Cannasouth Limited - White Label Products Agreement

Monday 4th May 2020

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Cannasouth Limited (NZX: CBD , Cannasouth) is pleased to announce it has entered into a supply agreement with MediPharm Labs Australia Pty Ltd (MediPharm Labs Australia) for the supply of white label medicinal cannabis products into the New Zealand Market.

MediPharm Labs Australia is a subsidiary of MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) (FSE:MLZ) (MediPharm Labs), a listed Canadian public company with a market capitalisation of approximately C$260m.

The agreement supports an important step for Cannasouth in meeting an initial business objective for the year, which includes making pharmaceutical grade medicinal cannabis products (products) available to New Zealand patients as soon as possible.

Under the agreement, MediPharm Labs Australia will supply a range of products that meet the required high-quality standards as regulated under the New Zealand Medicinal Cannabis Scheme (the Scheme). The Scheme came into effect on 1 April 2020 with the commencement of the Misuse of Drugs (Medicinal Cannabis) Regulations 2019 where the New Zealand Ministry of Health’s, Medicinal Cannabis Agency is responsible for regulatory oversight. After an exhaustive global search of New Zealand-compliant medicinal cannabis product manufacturers, Cannasouth's CEO Mark Lucas was impressed with both MediPharm's product range as well as the company’s ability to deliver products that comply with Good Manufacturing Practices (GMPs) and New Zealand quality standards.

Lucas says, "This is an important development in Cannasouth's initial go-to-market product strategy, and is a great first step for Cannasouth in entering the market by supplying prescribers and patients with a range of affordable, quality pharmaceutical-grade medicinal cannabis products.

“Patients are desperately waiting for high-quality and competitively priced new cannabis-based medicines to become available under the Medicinal Cannabis scheme, and we are very pleased to achieve this first important step in that process. Meanwhile, Cannasouth’s experienced team of scientists will continue R&D efforts to develop our own next generation medicinal cannabis products, which is phase two of our product development plan.”

“As New Zealand is set to start seeing increased demand from patients for medicinal cannabis, MediPharm Labs will be ready to provide patients with a reliable supply of innovative pharmaceutical-quality products they can trust,” said Warren Everitt, Chief Executive Officer, MediPharm Labs Australia. “We are thrilled to be working with Cannasouth to bring new formulations and products to the New Zealand market. MediPharm Labs is well-equipped with our expertise, pharma-focused team of scientists, and GMP platform to meet the new quality standards set out by New Zealand’s regulators, which require all medicinal cannabis products be manufactured under GMP.”

During the two-year term of the agreement with MediPharm, Cannasouth will have exclusive rights to the formulation and dosage forms set out in the agreement for the New Zealand market. MediPharm will supply the products with Cannasouth’s branding. As the Scheme is in its foundation stages, Cannasouth is unable to provide revenue estimates for sales of these products at this time.

The agreement is conditional on confirmation from the New Zealand Medicinal Cannabis Agency that the products meet New Zealand’s quality standards and licensing requirements, as well as Cannasouth confirming that MediPharm Labs’ manufacturing and testing operations align with industry standards and applicable regulatory requirements set for in Cannasouth’s quality assurance program. It is also conditional on Cannasouth confirming certain insurance arrangements.

About MediPharm Labs

Founded in 2015, MediPharm Labs Corp specializes in the production of purified, pharmaceutical-quality cannabis oil and concentrates and advanced derivative products utilising a Good Manufacturing Practices certified facility with ISO standard-built clean rooms. MediPharm Labs has invested in an expert, research driven team, state-of-the-art technology, downstream purification methodologies and purpose-built facilities with five primary extraction lines for delivery of pure, trusted and precision-dosed cannabis products for its customers. Through its wholesale and white label platforms, MediPharm Labs formulates, develops (including through sensory testing), processes, packages and distributes cannabis extracts and advanced cannabinoid-based products to domestic and international markets. As a global leader, MediPharm Labs has completed commercial exports to Australia and is nearing commercialisation of its Australian manufacturing facility. MediPharm Labs Australia was established in 2017.

About Cannasouth Limited

Cannasouth is a biopharmaceutical research and development company based in the Waikato heartland of New Zealand. The Company has been established to focus on the development of the medicinally beneficial attributes of cannabinoid compounds such as CBD, THC and associated chemical structures that are produced by the cannabis plant. Our goal is the development of next-generation cannabinoid medicines that support patients' health outcomes and improve their quality of life. Our products will be under GMP using environmentally friendly methods without the use of harmful chemicals or solvents, ensuring patients are treated with pure cannabinoid therapeutic compounds of the highest quality.

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