$CNPOF Reports Fourth Quarter and Fiscal Year 2020 Financial Highlights

Strong financial position with $47 million cash on hand and no debt

Commenced operational ramp-up at 1.3 million sq.ft. flagship joint venture

Expanded ag-tech exposure in portfolio

Significant corporate milestones, including graduation to the TSX and launch of Strategic Advisory Board

TORONTO, June 3, 2020 – Canopy Rivers Inc. (the “Company” or “Canopy Rivers“) (TSX: RIV) (OTC: CNPOF), a venture capital firm specializing in cannabis, today released its audited consolidated financial statements for the fiscal year ended March 31, 2020 (“FY 2020“) and management’s discussion and analysis (“MD&A“) for the three and twelve months ended March 31, 2020.

“The global economic uncertainty brought on by COVID-19 capped off a volatile and challenging year for the cannabis sector. Despite these challenges, I am pleased with what our team achieved last year. However, we were not immune to this volatility, and following a strategic and operational review of our business, we recently announced a number of changes aimed at strengthening our financial discipline and positioning Canopy Rivers for sustained success moving forward,” said Narbé Alexandrian, President and CEO of Canopy Rivers. “Reflecting on the past year, there were several significant achievements that make me optimistic for fiscal year 2021. First, our portfolio companies reached new milestones, including the licensing of PharmHouse, the expansion of TerrAscend’s U.S. operations, and ZeaKal’s successful trials of its PhotoSeed™ technology. Second, our graduation to the TSX and the launch of our Strategic Advisory Board signalled our company’s continued maturation. Finally, we made four new investments, including two in ag-tech, which we believe is a critical component of the value chain that is poised to disrupt the cannabis sector.”

“While headwinds persist, we remain positive as we evaluate new opportunities that we believe will ultimately create value for our shareholders and help build the cannabis industry of tomorrow,” added Alexandrian.

Q4 2020 Financial Results¹

“Looking back on FY 2020, it is clear that cannabis companies encountered challenging conditions in the capital markets over those 12 months, and the impact of this shows in our financial results for the fiscal year,” said Eddie Lucarelli, CFO of Canopy Rivers. “However, we believe that this is more of a function of the slower-than-expected pace of development of the cannabis economy, rather than its long-term potential, which we continue to believe is significant. Based on our available cash resources and deep sector insights, we believe we are well-positioned to capitalize on the current market conditions and strengthen our portfolio of cannabis disruptors.”

Canopy Rivers reported a net operating loss (before equity method investees and fair value changes) of $0.9 million for the quarter.

Royalty, interest, and lease income was $2.6 million, net of a $0.3 million provision for expected credit losses. This includes income from the Company’s royalty and debenture agreements with Agripharm Corp., 10831425 Canada Ltd. d/b/a/ Greenhouse Juice Company, Radicle Medical Marijuana Inc. (“Radicle“), and The Tweed Tree Lot Inc., as well as interest income on the Company’s $40.0 million shareholder loan agreement with PharmHouse Inc. (“PharmHouse“), among other items.

Operating expenses were $3.5 million for the quarter, of which $1.2 million (or approximately 36% of the total) related to share-based compensation, a non-cash expense. Excluding non-cash items, operating expenses decreased by approximately 25% from the comparative period last year. Operating expenses included $0.9 million of consulting and professional fees relating to legal, audit, tax, accounting, and other regulatory advisory fees, as well as $1.3 million of general and administrative expenses relating to employee and director compensation, marketing and business development, and other public company costs. In response to the novel coronavirus (“COVID-19“) pandemic, the Company is taking measures to manage its cash resources. Specifically, subsequent to the end of FY 2020, the Company announced a series of organizational changes focused on generating net positive cash flows from operations. This includes a material reduction in its operating cash outflows (driven by a reduction in headcount, directors’ compensation, marketing expenses, and general corporate expenses) of a targeted minimum of 35% from the Company’s FY 2020 operating cash outflows on a normalized basis.

The Company’s share of loss from equity method investees was $3.2 million for the quarter. This includes the Company’s equity interests in Canapar Corp., 10663522 Canada Inc. d/b/a/ Herbert, High Beauty, Inc. (“High Beauty”), LeafLink Services International ULC, PharmHouse, and Radicle. The Company expects these equity method investees to continue to generate net losses in the near term due to the early-stage nature of these businesses as they continue to ramp-up operationally.

In addition to the reported share of losses and in connection with the Company’s regular assessment of indicators of impairment for equity method investees, the Company identified several factors that indicated that the Company’s equity investments in certain portfolio companies may be impaired. These factors included economic and regulatory uncertainty caused by COVID-19, a slowdown in retail distribution in both Canada and the United States, and a slower-than-expected ramp-up of commercial activities for certain entities. In total, the Company recognized impairment charges of $11.2 million for the quarter.

The Company also reported a net decrease in the fair value of financial assets that are reported at fair value through profit or loss (“FVTPL“) of $16.3 million for the quarter. This includes a decrease in the estimated value of certain royalty investments, as the slower-than-expected growth of the cannabis industry and broader economic challenges posed by the outbreak of COVID-19 have increased the risk profiles of the operations of certain counterparties to these agreements.

After consideration of operating income, operating expenses, equity method investees, and FVTPL fair value changes, Canopy Rivers reported a net operating loss of $31.6 million for the quarter.

Other comprehensive loss was $6.3 million, net of tax, for the quarter, which includes a $6.5 million, net of tax, decrease in the fair value of financial assets that are reported at fair value through other comprehensive income (“FVTOCI“). The primary factors contributing to this loss were a decrease in the fair values of the Company’s investments in TerrAscend Corp. (“TerrAscend“) and James E. Wagner Cultivation Corporation, the latter of which recently filed for protection under the Companies’ Creditors Arrangement Act. Due to the high levels of volatility observed in stock prices of publicly-traded cannabis companies and the market broadly, it is expected that net changes in fair value of financial assets at FVTOCI will continue to exhibit volatility in the near-term.

Outlook

As the Company’s equity method investees continue to ramp up operations, it is expected that in the near term, its comprehensive income (or loss) will continue to be largely driven by net changes in the fair value of financial assets at FVTPL or financial assets at FVTOCI. In turn, the Company expects that these net changes will continue to be largely dependent upon the regulatory, business, and capital markets environment in the cannabis industry, as well as the regulatory, business, and capital markets environment in the broader economy as a result of the COVID-19 pandemic. Given the inherent volatility of valuations of investments in the global cannabis sector and the unknown impact of the COVID-19 pandemic, the Company anticipates continued volatility in its financial results.

Q4 2020 Corporate and Portfolio Updates

The following represents a summary of the milestones achieved by Canopy Rivers and its portfolio companies during the fourth quarter of FY 2020:

Canopy Rivers

• Canopy Rivers announced the launch of a normal course issuer bid, signalling management’s position that the current share price does not reflect the Company’s underlying value and future prospects.

Portfolio Updates

• PharmHouse received a licence amendment from Health Canada, enabling it to ramp up operations across its 1.3 million sq. ft. automated greenhouse and begin to fulfil its offtake agreements.
• TerrAscend strengthened its financial position, finalizing a US$33.5 million non-brokered private placement and, later in the quarter, its wholly-owned subsidiary TerrAscend Canada Inc. entered into an $80.5 million loan financing arrangement with Canopy Growth Corporation.
• TerrAscend also continued to develop its U.S. operations, as two of its subsidiaries (one in New Jersey and another in Utah) received approval for the processing or cultivation of medical cannabis in their respective states.
• BioLumic Ltd. (“BioLumic“) received approval from the New Zealand government to apply its proprietary UV light technology to medical cannabis and has begun conducting medical cannabis commercial trials. BioLumic also entered into a collaboration with New Zealand’s largest medical cannabis company, Helius Therapeutics.
• YSS Corp. opened two downtown Calgary flagship stores in January, as well as its 17th retail location in Grand Prairie, Alberta in February.
• Headset, Inc. (“Headset“) and High Beauty both grew their Canadian presence. Headset launched its Insights product for the British Columbia cannabis retail market and High Beauty officially launched in Canadian retail outlets, including The Bay, Shoppers Drug Mart, and Indigo.
• ZeaKal Inc. announced research results from multi-year field trials of its PhotoSeed™ technology. The trials showed an increased ability to significantly improve both oil and protein composition in soybeans.
• Canopy Rivers advanced $1.0 million to Radicle pursuant to a convertible debenture, which is expected to enable Radicle to increase production of its Gage brand, which is regularly sold out in cannabis retail stores, and work towards the launch of other popular brands for which it holds certain exclusive licences.

This press release should be read in conjunction with the Company’s audited consolidated financial statements for FY 2020 and MD&A for the three and twelve months ended March 31, 2020, which are available under the Company’s profile on SEDAR at www.sedar.com and on the Company’s website at www.canopyrivers.com/investors. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.

For more information regarding the Company and its portfolio companies, please refer to the MD&A and the Company’s annual information form dated June 2, 2020 (“AIF“), also available under the Company’s profile on SEDAR at www.sedar.com and on the Company’s website at www.canopyrivers.com/investors.

About Canopy Rivers Inc.

Canopy Rivers is a venture capital firm specializing in cannabis. Its unique investment and operating platform is structured to pursue investment opportunities in the emerging global cannabis sector. Canopy Rivers identifies strategic counterparties seeking financial and/or operating support. Canopy Rivers has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities to work with Canopy Growth Corporation (TSX: WEED, NYSE: CGC) and collaborate among themselves, which Canopy Rivers believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire portfolio.

Forward-Looking Statements

This news release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. To the extent any forward-looking information in this news release constitutes “financial outlooks” within the meaning of applicable Canadian securities laws, the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding: the Company’s intention to implement changes aimed at strengthening its financial discipline and positioning it for future success; the Company’s belief that ag-tech is a critical component of the value chain that is poised to disrupt the cannabis sector; the Company’s evaluation of new opportunities that it believes will create value for shareholders and help build the cannabis industry; the Company’s belief that challenging conditions encountered by cannabis companies in FY 2020 were a function of the slower-than-expected pace of development of the cannabis economy, rather than its long-term potential, which the Company believes is significant; the Company’s belief that it is well-positioned to capitalize on current market conditions and strengthen its portfolio; the expectation that certain equity method investees will continue to generate net losses in the near term; the Company’s focus on generating net positive cash flows from operations, including the targeted reduction in its operating cash outflows; the expectation that net changes in fair value of financial assets at FVTOCI will continue to exhibit volatility in the near-term; the Company’s expected financial outlook; management’s position that the Company’s current share price does not reflect its underlying value and future prospects; Radicle’s expected use of proceeds; and expectations for other economic, business, and/or competitive factors.

Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. Our actual financial position and results of operations may differ materially from management’s current expectations. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: regulatory and licensing risks; competition risks; changes in cannabis industry growth and trends; changes in the business activities, focus and plans of the Company and its investees and the timing associated therewith; stock market volatility; the Company’s actual financial results and ability to create long-term value for shareholders and manage its cash resources; changes in general economic, business and political conditions, including challenging global financial conditions and the impact of the COVID-19 pandemic; potential conflicts of interest; the regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; changes in the Company’s relationship with Canopy Growth Corporation and its investees; risks associated with the termination, renegotiation and enforcement of material contracts; credit, liquidity and additional financing risks; changes in applicable laws; compliance with extensive government regulation, including the Company’s interpretation of such regulation; changes in the global sentiment towards, and public opinion of, the cannabis industry; divestiture risks; and the risk factors set out in the Company’s AIF, filed with the Canadian securities regulators and available on the Company’s profile on SEDAR at www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.