CanniMed Releases New Letter to Shareholders

CanniMed Therapeutics Inc. (“CanniMed” or the “Company”)
(TSX:CMED) releases a new letter to shareholders highlighting the
benefits of acquiring all of the issued and outstanding shares of
Newstrike Resources Ltd. (“Newstrike”) and warning of the risks
posed by Aurora Cannabis Inc.’s (“Aurora”) hostile bid (the “Hostile
Bid”) to acquire all of the common shares of the Company.

This press release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20180103005664/en/

Shareholders with questions or who need help voting should contact
Kingsdale Advisors at 1-888-518-1554 or by email at contactus@kingsdaleadvisors.com
or visit www.NewstrikeNotAurora.com.

The full text of the letter to shareholders is below and has been
filed on SEDAR and mailed to shareholders.

AURORA’S HOSTILE BID WILL LEAVE YOU WITH NOTHING.

The Aurora rip-off has already started. Question the negative impact
Aurora has had on your CanniMed shares already and the currency being
offered.

Aurora’s hostile bid is holding CanniMed’s share price back.

Your CanniMed shares are already trading above Aurora's capped offer of
$24.00 and would likely be even higher if Aurora's hostile bid was not
weighing the share price down. This is real value that you should have
earned and are entitled to. Aurora’s cap means you will not benefit as
the cannabis space continues to rise in value. What Aurora’s offer will
do is leave you with unlimited downside risk, where you could lose the
value you perceive.

Question the currency Aurora is offering.

Instead of cash, Aurora is offering you inflated shares – shares that
were worth only half as much just two weeks before its hostile bid was
announced. The 110% run up in Aurora’s share price is not based on
anything Aurora did – just pure speculation. This run up may be good for
current Aurora shareholders, but future shareholders (including CanniMed
shareholders who tender into the bid) will not benefit from any part of
it.

The actions of Aurora insiders demonstrate they know their share
price is unsustainable.

• Four insiders, including the CEO, dumped over $17.8 million in Aurora
shares just one day before the share price fell over 14%, after they
made the offer to CanniMed.

• At the same time they were selling their own Aurora shares they were
asking you to accept Aurora shares for your shares of CanniMed.

• Aurora’s management have sold off more than $42.9 million worth of
shares in 2017.

• Locked-up shareholders have included exclusive downside protection on
the share price of CanniMed shares at $16.00 and $18.00 (based on
certain conditions).

There is a reason why Aurora has consistently been one of the most
shorted stocks in the cannabis space.

How long until the market catches on to Aurora’s growing pattern of
problems – two product recalls, signature production facility with
increasing costs and behind schedule, and a reckless buying spree that
has spread Aurora’s management thin?

Why would you want to be the one carrying that risk?

Aurora’s hostile bid is NOT driving CanniMed’s share price – it’s
holding it back from going even higher!

AURORA KNOWS ITS OFFER IS A BAD DEAL FOR CANNIMED SHAREHOLDERS

“…it makes sense for us to grab assets in Canada [like CanniMed]… at
incredibly attractive valuations and they’ll be worth two or three times
those valuations in 12 months…” – Aurora’s Executive Vice President,
Cam Battley

This implies a minimum value of $30 for CanniMed shares based on
CanniMed’s share price at the time of the offer. Aurora is trying to
grab your shares without paying you fair value for them. Don’t let them
get away with it!

CANNIMED’S ACQUISITION OF NEWSTRIKE WILL MAKE YOUR SHARES MORE
VALUABLE – ESPECIALLY TO AURORA.

In early 2017, CanniMed promised you we would provide an opportunity to
take advantage of the soon-to-be booming $8 billion Canadian
recreational market. Our acquisition of Newstrike and its Up Cannabis
brand, tied to the iconic Canadian band, The Tragically Hip, will do
just that.

With the advice of two independent financial advisors, external legal
advisors, and the unanimous recommendation by the special committee of
independent directors, your CanniMed board of directors has concluded
that acquiring Newstrike presents the best opportunity for significant
financial returns and recommends NOT TO TENDER TO AURORA’S HOSTILE BID
THAT OFFERS PHANTOM VALUE BASED ON AN INFLATED SHARE PRICE.

The combination of CanniMed and Newstrike creates a major player across
the Canadian recreational and global medical markets and will be valued
as such. 2018 is the time to realize optimal value for your CanniMed
shares – now is not the time to sell out! We see a clear path to $37 per
CanniMed share — or more.

CanniMed is incredibly well-positioned with its industry leading oils
capability which, based on current oils product pricing, will have the
capacity to generate over $1 billion in annual revenue and 70+% profit
margins. Based on our market experience and observation of the global
medical markets and U.S. state markets, we believe oils and oil
derivatives will represent 50+% of the Canadian and global markets and
CanniMed’s operating results will accordingly lead the industry. The
combined planned grow capacity of CanniMed and Newstrike of 45,000 kg
will place it among the sector leaders. All of this points to a higher
share price and real value delivered to you as a shareholder.

The Newstrike acquisition is accretive. Aurora’s offer is dilutive.

On a standalone basis CanniMed provides $1.34 EBITDA¹ per
share and with Newstrike you see 14.6% accretion to $1.54 EBITDA per
share. Conversely, by tendering to Aurora’s hostile bid, you will see a
36.7% dilution to $0.85 EBITDA per share. This means Aurora is offering
you $0.69 or 45% less than what a combined CanniMed and Newstrike offers
you.

Figures 1 and 2: 2019E EBITDA per Share Accretion/Dilution

Aurora’s hostile bid is NOT driving CanniMed’s share price. It’s
holding it back.

Aurora’s hostile bid is already capping your share price – without this
noise CanniMed’s share price is likely to have traded well above the
Aurora capped offer of $24.

Since November 14th, 2017, the last trading day before Aurora announced
its intention to launch its hostile bid, the average share price in the
cannabis sector has increased by 70.9%. This means that if CanniMed
shares had not been constrained by the hostile actions of Aurora and the
locked-up shareholders (and been allowed to trade in-line with its
peers) your CanniMed shares would be worth $26.15 BEFORE accounting for
the accretion from the Newstrike acquisition. This is real value that
should have been earned by CanniMed shareholders that Aurora and the
locked-up shareholders clearly don’t want you to have.

Furthermore, when you combine this realization with the accretion and
significant strategic benefits brought by the Newstrike acquisition it
becomes clear that Aurora is not offering you a premium at all. Rather,
they are preventing CanniMed shareholders from realizing substantial
value through a share price which has the potential to reach over $37 in
the near term.

Figure 3: CanniMed’s Share Price Without Impact of Aurora’s Hostile Bid

CanniMed will be more valuable as a company that offers both medical
and recreational products – expanding from patients to patients and
customers.

Aurora knows this and that is why it is attempting to disrupt the
Newstrike acquisition. There is significant value in CanniMed’s existing
business that is not currently recognized by the market because it does
not yet have access to the recreational market. The Up Cannabis brand
expands CanniMed’s market from just patients to patients plus
adult recreational consumers – an additional $8 billion opportunity.

Aurora’s executive vice president, Cam Battley, has tried to mislead you
with his tagline “no revenue, no patients” trumpeting it everywhere he
goes in relation to Newstrike. In our view this demonstrates his clear
lack of understanding of the opportunity in the recreational market and
is proof point number one as to why he and Aurora should not be in
charge of your shares – of course there are no revenues or customers –
none of the LPs have revenues or customers in the recreational market –
it does not exist yet and will only be legal in Canada in July 2018.

Aurora doesn’t have any revenue or customers in the recreational space
either.

The question for a recreational focused brand is not ‘who has revenue
now’; the question is ‘who is best positioned to capture
customers and market share when the recreational market opens’? To
that the answer is clear: A combined CanniMed and Newstrike. The value
in Newstrike is in its people, its strategy, and its customer focused
brand, Up Cannabis.

CanniMed has an industry best 17 year track record of pharmaceutical
cannabis cultivation experience with zero product recalls or product
shortages. With the acquisition of Newstrike, CanniMed will increase its
size and solidify its position as a global leader and position itself as
a top player in Canada’s fully legalized medical and adult-use cannabis
industries. LPs who are selling medical cannabis are legally obligated
to provide cannabis to their patients. Conversely, 100% of Newstrike’s
cannabis is dedicated for the recreational market.

In a world of similar products and new consumers, branding is
critical – Up Cannabis is a premier brand

We are not surprised that Aurora does not see the value in the Up
Cannabis brand. They think their big building, Aurora Sky, which has the
potential for a large amount of capacity is a brand. It’s not.

Every successful consumer good in the world is based on a brand, not the
factory that produces the product. Aurora is not a brand but is a mirage
based on a yet-to-be completed facility. In a world where consumers have
similar choices or do not know what they are looking for, brand becomes
pivotal. The recreational market, like the alcohol market, will be
dominated by brand leaders.

The strategic partnership that Up Cannabis has developed with iconic
Canadian band The Tragically Hip means that much of the difficult and
uncertain early work of building awareness in an incredibly competitive
market can be deployed with relative ease, leaving Up Cannabis and The
Tragically Hip to focus on the next stage efforts while most other
companies are still trying to prove that they exist.

The Tragically Hip bring a highly targeted, committed market of 700,000
opt-in fan members who are open to receiving information from The
Tragically Hip via Facebook, Twitter, and The Tragically Hip’s website.
This represents a market opportunity that is unparalleled. Per
Lighthouse Consulting, regular weekly recreational consumers spend about
$100 per week on cannabis.² Based on conservative projections
and by capturing only 5% of this fan base, Newstrike estimates that the
annual market opportunity of such fan base is approximately $150
million. Brand loyalty, like a combined CanniMed and Newstrike, will win
the day.

The role of The Tragically Hip in this partnership is not to give
“testimonials or endorsements”, as prohibited in the current draft of
Bill C45. The Tragically Hip are active partners in the development of
Up Cannabis’ brand and marketing plans, using their innate knowledge of
Canada and Canadians to create a company and a brand with a true
emotional connection with people across this country.

The Tragically Hip established their permanent place in the short list
of truly iconic Canadian artists for many reasons – their love for
Canada; the stories of a nation that they wove through their incredible
signature sound; and a broad commitment to justice in all its forms.

Real synergies for real value.

The acquisition of Newstrike presents substantial financial,
operational, and infrastructure-related synergies. With its 17 years of
experience, CanniMed will be able to apply its proven sales, IT, and
logistical infrastructure across both platforms. CanniMed is known for
delivering a quality product. That reputation for quality will be
leveraged and strengthened by joining with Up Cannabis and The
Tragically Hip brand affiliation. Combining CanniMed’s national presence
with a recreational producer based in Canada’s largest market, Ontario,
provides an advantage as provincial regulators are likely to favour
domestic products and brands.

Shareholders should take particular note of the enormous opportunity
presented by CanniMed’s oil production capabilities and expertise.
CanniMed is currently expanding its cannabis oil production capabilities
far ahead of its competitors and is positioned to produce oils to be
used in, as the law allows, vape cartridges, tinctures, edibles,
capsules, infusions and all forms of concentrates. Based on our Canadian
market experience, data from Colorado and California and feedback from
the global medical market, we estimate that over half the recreational
and medical markets will be oils and oil derivative products. Vape
cartridge sales are increasing rapidly in U.S. adult use markets and
CanniMed’s oil production facility will be able to supply the Canadian
recreational market through Up Cannabis, expanding beyond its current
medicinal offering.

By the end of 2018, CanniMed’s oil plant annual capacity will be 12
million bottles. With actual current product prices ranging from $80 to
$150 per bottle, there exists a $1+ billion revenue opportunity. These
are synergies that are only available through the acquisition of
Newstrike, not through Aurora’s hostile bid.

Newstrike is positioned to grow its production 10-fold by 2019.

Newstrike has been producing for almost a year and already has over 970
kg of high quality product – or approximately $10 million worth – in
inventory and its Brantford facility is running at full capacity in
preparation for the launch of the recreational market in July. In
addition, upgrades at its flagship 200,000 sq ft greenhouse – four times
the size of Aurora’s current operations – continue on time and on budget
to be in commercial production in time to satisfy the significant
anticipated demand. The combination of these strategically located
growing assets and CanniMed’s industry leading oils capability creates a
powerful platform to meet the demands of customers for high quality
products across Canada and drive significant revenue and EBITDA growth
for shareholders.

DON’T BE FOOLED BY AURORA’S CLAIMS

As a growing number of CanniMed shareholders are rejecting Aurora’s
hostile bid and supporting the acquisition of Newstrike, Aurora is
becoming increasingly desperate and misleading. In fact, the Ontario
Securities Commission and the Financial and Consumer Affairs Authority
of Saskatchewan have ordered Aurora to correct and clarify some of its
previous statements. Shareholders should question what Aurora is telling
them and challenge Aurora’s pattern of poor performance.

Here are the facts Aurora doesn’t want you to know:

Aurora needs CanniMed. CanniMed does not need Aurora.

Any ‘strategic rationale’ Aurora points to is already available through
CanniMed’s existing business, the Newstrike acquisition, and other
opportunities available to us. As Aurora’s management has said,
companies like CanniMed will be worth two or three times as much in the
next 12 months.

Aurora has capped your upside but left you with significant downside
risk.

The potential value offered has been capped at $24.00 per CanniMed share
(based on a formula related to Aurora’s share price and payable in
Aurora shares) offering you no exposure to market upside nor additional
value which will be created by CanniMed or the industry prior to close.
You have no downside protection at a time when Aurora has had increasing
costs and delays at Aurora Sky, as well as numerous operational issues,
including two product recalls in 2017. It is extremely telling that the
shareholders who have entered into questionable off-market lock-up
agreements have negotiated downside protection on the share price of
CanniMed shares at $16.00 and $18.00 (based on certain conditions) while
no protection is offered to other CanniMed shareholders.

You will own less of Aurora than you should be entitled to.

Aurora’s hostile bid only gives CanniMed shareholders minimal ownership
of the combined company, even though CanniMed currently has greater
production capacity, a similar number of patients, and an established
and successful track record of quality in a strict government regulated
environment.

Furthermore, if Aurora’s share price continues to trade above $5.30, the
consideration available to you does not increase – but your ownership in
the combined company is reduced. For example, if Aurora’s current share
price of $9.60 (as of December 29, 2017) persists, you would only
receive 2.5 Aurora shares for every CanniMed share, not the 4.5 Aurora
shares that would imply a value for CanniMed in excess of $43.45 per
CanniMed share or approximately 10.9% of the combined company.

Aurora’s management can’t execute and their actions show they don’t
believe they can.

You should be very wary about the risk associated with an Aurora
management team who has a track record of poor execution and even more
concerned that their actions demonstrate they doubt they will be able to
make good on the promises they have made to the market by selling off
shares.

Figure 4: Management Track Record Comparison

VOTE GREEN TO ACQUIRE NEWSTRIKE. DO NOT TENDER TO AURORA AND DO NOT
VOTE BLUE.

By voting for the Newstrike acquisition you will increase the value of
your CanniMed shares while preserving your ability to obtain a real
premium at a later date.

CanniMed’s board and management will vote their GREEN proxies to acquire
Newstrike and will not tender to Aurora’s hostile bid.

We recommend shareholders do the same, no matter how many shares are
owned. Here’s how:

1. To vote FOR the Newstrike acquisition vote GREEN. Follow the
instructions on the GREEN VIF or form of proxy by January 19th,
2018 at 10:00 am (EST). Shareholders with questions or who need help
voting should call Kingsdale Advisors toll-free at 1.888.518.1554 or by
email at contactus@kingsdaleadvisors.com.

2. Ignore and recycle any Blue proxy forms received.

3. To reject Aurora’s hostile bid, simply do nothing. Do not
tender your shares. If you have tendered your shares in error or now
wish to withdraw, simply ask your broker or Kingsdale Advisors at
1.888.518.1554 or contactus@kingsdaleadvisors.com
to assist with this process.

Advisors

Kingsdale Advisors is acting as strategic shareholder and communications
advisor. AltaCorp Capital Inc. is acting as financial advisor to the
Board and Borden Ladner Gervais LLP is acting as legal advisor to the
Board. Cormark Securities Inc. is acting as financial advisor to the
Special Committee and Stikeman Elliott LLP is acting as legal advisor to
the Special Committee.

About CanniMed Therapeutics Inc.

CanniMed is a Canadian-based, international plant biopharmaceutical
company and a leader in the Canadian medical cannabis industry, with 17
years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class
research and development platforms with a wide range of
pharmaceutical-grade cannabis products. In addition, the Company has an
active plant biotechnology research and product development program
focused on the production of plant-based materials for pharmaceutical,
agricultural and environmental applications.

The Company, through its subsidiaries, was the first producer to be
licensed under the Marihuana for Medical Purposes Regulations, the
predecessor to the current Access to Cannabis for Medical Purposes
Regulations. It was the sole supplier to Health Canada under the former
medical marijuana system for 13 years, and has been producing safe and
consistent medical marijuana for thousands of Canadian patients, with no
incident of product diversion or recalls.

For more information, please visit our websites: www.cannimed.ca
(patients) and www.cannimedtherapeutics.com
(investors).

Non-IFRS Measure: Earnings before Interest, Taxes, Depreciation and
Amortization (“EBITDA”)

CanniMed uses EBITDA as a supplemental financial measure of its
operational performance. In addition, analysts use 2019 estimated EBITDA
in their published reports. CanniMed believes EBITDA to be an important
measure of its and other companies’ capacity to generate cash flow from
operations as it excludes the effects of items which primarily reflect
the impact of long-term investment and decisions and finance strategies,
rather than the performance of CanniMed’s and other companies’
day-to-day operations. CanniMed measures EBITDA as net earnings (loss)
from continuing operations plus income taxes expense (recovery),
interest expense and depreciation and amortization. CanniMed believes
the references to EBITDA in analysts’ reports are calculated similarly.

EBITDA is a non-IFRS financial measure which does not have a
standardized meaning. Accordingly, such information should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with IFRS.

Notice Regarding Forward Looking Statements

This document contains forward-looking statements. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements
of CanniMed and Newstrike to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking statements.

These forward-looking statements include, but are not limited to,
statements relating to our expectations with respect to: estimated
earnings before interest, taxes, depreciation and amortization (EBITDA)
for 2019, estimated accretion per CanniMed share of the acquisition of
Newstrike; the revenue opportunity for CanniMed; projected profit
margins; the market for cannabis products, including oils; fan base
market opportunity; the timing and outcome of the proposed acquisition
of all the issued and outstanding common shares of Newstrike; projected
2019 combined production capacity of 45,000kg of CanniMed and Newstrike;
and the projected value of licensed producers. Often, but not always,
forward-looking statements 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. In respect of the forward-looking statements and
information concerning the anticipated benefits and completion of
CanniMed’s acquisition of Newstrike, CanniMed has provided such
statements and information in reliance on certain assumptions that it
believes are reasonable at this time, including assumptions as to
projected 2019 results of operations for CanniMed, Newstrike and Aurora;
projected profit margins on oil sales and other cannabis products; that
the market price for the shares of CanniMed will be based on industry
average multiple of 2019 estimated EBITDA; benefits and synergies
realized from the acquisition of Newstrike by CanniMed; the legalization
of the Canadian adult recreational cannabis market; the receipt of all
shareholder, regulatory and court approvals for CanniMed’s acquisition
of Newstrike. The combined results of CanniMed and Newstike assumes the
completion of CanniMed’s acquisition of Newstrike and there is no
certainty that the acquisition of Newstrike will receive all required
approvals or will be completed. Accordingly, readers should not place
undue reliance on the forward-looking statements and information
contained in this document.

Since forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks and
uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors and risks, including
the risk that the market for cannabis products will be less than
expected; the risk that 2019 operating results of CanniMed and Newstrike
will be less than expected; the risks associated with the integration of
the acquisition of Newstrike, including that synergies will not be as
significant as anticipated; the risks associated with a delay in the
legalization of the Canadian adult recreational market; and the risk
that the market price of CanniMed will not be based on industry average
multiple of 2019 estimated EBITDA. Readers are cautioned that the
foregoing list of factors is not exhaustive. Additional information on
other factors that could affect the operations or financial results of
CanniMed and the completion of its acquisition of Newstrike are included
in documents on file with applicable securities regulatory authorities,
including the management information circular of CanniMed dated December
8, 2017, available on sedar.com.

The forward-looking statements contained in this document are made as of
the date of this document and, accordingly, are subject to change after
such date. CanniMed does not assume any obligation to update or revise
any forward-looking statements, whether written or oral, that may be
made from time to time by CanniMed, except as required by applicable law.

None of the Toronto Stock Exchange, TSX Venture Exchange and their
Regulation Services Providers accept responsibility for the adequacy or
accuracy of this document.

¹ Non-IFRS Measure: Earnings before Interest, Taxes,
Depreciation and Amortization. Estimated 2019 EBITDA based on analyst
consensus estimates from Capital IQ (excluding outliers where applicable)
²
http://business.financialpost.com/commodities/agriculture/half-of-canadian-pot-smokers-surveyed-spend-100-on-weekly-buzz-

View source version on businesswire.com: http://www.businesswire.com/news/home/20180103005664/en/

Source: Business Wire
(January 3, 2018 - 9:07 AM EST)

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