Item 9 Labs Corp. (OTCQX: INLB) (the "Company") — a vertically integrated cannabis dispensary franchisor and operator that produces premium, award-winning products — announced today that it has signed a definitive agreement to acquire Sessions Cannabis ("Sessions"), one of Canada's largest cannabis retail franchisors.

"This is a transformative acquisition that fast-tracks our entry into the Canadian market and brings tremendous value to our shareholders," said Item 9 Labs Corp. CEO Andrew Bowden.

"With an exponential increase in store count across North America, this acquisition would transition us from being a multi-state operator to an international cannabis company and the largest global cannabis franchisor. The potential to accelerate growth through both franchising and additional opportunistic acquisitions is immense. This is simply the first step to much deeper market penetration, both in Ontario and other provinces."

Founded in 2019, Sessions currently has 43 stores throughout the Province of Ontario, the majority of which are located in prime retail shopping centers, typically anchored by national tenants such as Costco, Walmart, well-known grocers, quick service restaurants and more. The Ontario-based business has a franchise system comprised of 18 franchisees, the majority of which are multi-unit owners, and plans to continue its growth across Canada with multiple openings already planned for this year. Sessions also anticipates it will continue its consistently strong performance.

Item 9 Labs Corp. acquired ONE Cannabis Group ("OCG Inc.") in March 2021, the parent company to U.S. cannabis dispensary franchise, Unity Rd. – marking the Company the first national vertically integrated cannabis dispensary franchisor. The combination of the Unity Rd. franchise system—which currently has 20-plus partners developing more than three dozen stores across 10-plus U.S. states—with Sessions makes Item 9 Labs Corp. the largest global and publicly traded cannabis franchise company. 

Canada, the world's second-largest cannabis market, brought in CA$3.9 billion in cannabis sales in 2021, a 50 percent year-over-year growth, according to federal data agency Statistics Canada. Ontario is the country's largest cannabis market with CA$1.47 billion in 2021 sales. According to BDSA, the Canadian market is expected to climb to CA$4.7 billion in 2022 and nearly CA$6.3 billion by 2026.

"The Canadian cannabis market has grown tremendously over the past few years, and we have certainly felt that impact and benefitted from first-mover advantage in several markets," said Steven Fry, CEO and co-founder of Sessions, noting that Sessions' locations that have been open for more than a year see an average annual revenue of CA$2.46 million.

"We have amazing multi-unit franchisees and a solid franchise system that is dedicated to their success, but to further innovate within the industry and expand our reach, we need the right partner. We believe we have found that with Item 9 Labs Corp. and their franchise brand, Unity Rd."

The Company's Chief Franchise Officer Mike Weinberger agrees with Fry that this is the perfect synergy. He added, "From the brand values and education-first approach with customers to the rock-solid franchise program Steven and his team have built, there are several similarities across Sessions and our Unity Rd. franchise brand. This is a huge opportunity for Item 9 Labs Corp. and further solidifies our mark as leaders in cannabis franchising."

The Company's merger and acquisition activities for the 2022 calendar year have ramped up quickly. Item 9 Labs Corp. acquired a dispensary license and storefront in North Denver, Colorado and recently signed an Asset Purchase Agreement ("APA") for a medicinal and recreational dispensary and cultivator, The Herbal Cure, also located in Denver. Colorado is among the top markets where Item 9 Labs Corp. is actively seeking acquisitions of cannabis dispensaries.

"We are serious about accelerating our growth and opening the doors for more prospective entrepreneurs to enter the complex cannabis space, and it is reflected in our merger and acquisition activity," said the Company's Vice President of Mergers & Acquisitions, Mark Busch.

"Acquiring one of Canada's largest cannabis retailers is a great milestone for our team and demonstrates our ability to close large transactions."

The closing of this acquisition is subject to customary closing conditions, details of which can be found in the Company's 8k filing on May 24, 2022.