Zenabis Global Inc. (TSXV: ZENA)("Zenabis" or the "Company") is pleased to announce that it has entered into a binding term sheet for a three-year supply arrangement with leading German pharmaceutical research company Farmako GmbH ("Farmako") for: (1) the supply of biosynthetically produced pure CBD isolate oil (99.9%) from Farmako to Zenabis for sale in Canada; and (2) the supply of European Union Good Manufacturing Practices ("EU GMP") certified cannabis cultivated in Zenabis' indoor facilities in Canada for sale by Farmako to the German medical market.

Andrew Grieve, Chief Executive Officer of Zenabis, stated, "While Zenabis is committed to producing both hemp- and cannabis-derived CBD products, we are thrilled to have signed the very first commercial agreement globally of its kind for the purchase of biosynthetic cannabinoids.  We are purchasing the CBD isolates from Farmako at an incredibly low cost, which will allow us to tap into the rapidly growing Canadian CBD market by supplying products that will be priced much more competitively than current market offerings. This partnership will also enable Zenabis to supply high-quality medical cannabis into Germany, one of the largest medical cannabis markets in the world, thereby establishing our position in the European cannabis market."

Farmako founder and chief executive officer, Niklas Kouparanis, said, "Signing the first deal in history to sell mass-produced CBD isolate created by biosynthesis to Zenabis is a significant milestone for both Farmako and for the global Cannabis industry. Being the first European company to enter into an agreement to sell CBD isolates to the Canadian market puts Farmako at a significant competitive advantage within the global market and also supports us in bridging the gap between cannabis and pharmaceuticals. With our unique Continuous Bacterial Cannabinoid Biosynthesis (CBCB) method using our patented Bacterium Zynmomonas Cannabinoides®, we are able to produce nature-identical cannabinoids very effectively and at very low costs on a large scale."

Highlights of CBD Isolate Agreement

• Subject to Farmako's production capacity, Farmako will supply Zenabis with 36,000 kg of CBD isolate over a three-year period, commencing in Q4 2019.
• If Farmako and Zenabis are able to obtain EU export and Canadian import licenses for both the recreational and medicinal markets in Canada, then Farmako will supply the CBD isolate from its facility in Germany.  If such licenses are not available, Farmako will construct a bioreactor at one of Zenabis' existing licensed facilities in Canada.
• Zenabis will offer the product through its Canadian medical and recreational brand distribution channels as well as in bulk for manufacturing purposes to other licensed producers. Zenabis will also have a right of first refusal to purchase any additional CBD isolate produced by Farmako for sale in the Canadian market.
• Zenabis will pay Farmako an amount equal to Farmako's marginal cash cost of production and will then split Zenabis' profits from the sale of the product with Farmako (50% to Farmarko if the profit exceeds a specified threshold, otherwise 60% to Farmako).
• Mr. Kouparanis continued, "In contrast to other biosynthetic methods, Farmako does not use yeast but a genetically modified tequila bacterium for CBD production. Our CBCB method has considerable advantages over other biosynthetic production methods, as it can produce pure CBD or other cannabinoid with extremely high levels of purity at a mass scale and at costs that are far below the current market price."

Highlights of Cannabis Agreement

Subject to Zenabis fulfilling EU GMP certification requirements, Zenabis will supply Farmako with up to 5,000 kg per year of indoor EU GMP certified cannabis for the medical market. Shipments are expected to commence in Q4 2019 and will include, but not be limited to, dry flower, soft gels and sublingual sprays.

Germany's medical cannabis laws were introduced in March 2017 and the country is poised to become one of the largest federally regulated medical cannabis markets in the world. Without domestic production, the country must import supply to meet rapidly growing demand and Zenabis is now positioned to secure market share through its supply arrangements with Farmako.