Cann : Monthly Activities/Appendix 4C Cash Flow Report

ASX ANNOUNCEMENT

28 April 2022

March 2022 Quarterly Activities Report and Appendix 4C

• • Mildura facility achieves practical completion

• • ODC permit granted for commercial cultivation at Mildura

• • Sales revenue up 334% on prior corresponding period

• • Significant subsequent events, including:

  • o Exclusive option evaluation agreement signed with GSK

  • o Satipharm Advanced CBD product gets green light from UK Food Standards Agency

  • o New working capital banking facility and revised terms for existing facility

28 April 2022 - Cann Group Limited (ASX: CAN) (Cann or the Company) is pleased to provide its March 2022 Quarterly Activities Report and Appendix 4C.

Financials

Net cash outflows from operating activities for the quarter ending 31 March 2022 were $4.188 million. Key cashflow items for the quarter were:

• • Cann collected $1.290 million in receipts from customers.

• • Cann received $1.667 million in GST receipts with a further $0.706 million to be to be received in April 2022.

• • Staff and administration costs were in line with expectations and consistent with the prior quarter.

• • Payments of $0.10 million were made to directors (being related parties) by way of salary payments.

• • Research and development expenses of $0.391 million were incurred during the quarter as the Company continued with its research and development program.

• • Cashflow from investing activities included $5.844 million in expenditure associated with the construction and development of Cann's new production facility near Mildura. An amount of $4.744 million was drawn down from the Company's NAB facility for this development.

Sales and production

Unaudited sales revenue for the quarter ended 31 March 2022 was $1.270 million representing a 334% increase to the prior corresponding period. A number of factors have contributed to this revenue growth including increased sales of extracted oil formulations to existing and new customers, new sales of dried flower products released from our newly GMP licensed Southern

Cann Group Limited (ACN 603 949 739)

4 Research Avenue, Bundoora, VIC 3083 Australia Ph: [phone]

facility, and growth in sales of our Satipharm capsules, particularly in Australia. We are expecting continued increased sales from these sources, as well as growth in our UK Satipharm capsule sales, during the next quarter ending June 2022.

In January, the Therapeutic Goods Administration (TGA) granted Cann a GMP licence to manufacture therapeutic goods for Cann's Southern facility (Southern GMP Licence). This licence enables Cann to manufacture Active Pharmaceutical Ingredient (API) and medicinal cannabis products under cGMP conditions at its Southern facility for supply to customers in Australia and overseas. Dried cannabis flower products produced under this licence have now been supplied to customers and demand for these products continues to be strong.

In March the Office of Drug Control (ODC) granted Cann the necessary permit to allow commercial cultivation activities to commence in the Mildura facility. This permit allows for cultivation and production of medicinal cannabis and research activities in relation to medicinal cannabis.

Subsequent to the granting of the permit, Cann has transferred medicinal cannabis plants from its Southern facility to Mildura and has established the starting genetics. The first commercial crop is expected to be harvested at the Mildura facility in June 2022.

A Cann employee tends mother plants in our state-of-the-art glasshouse facility.

As noted below in relation to subsequent events, a separate permit covering the manufacture of medicinal cannabis products at the Mildura facility was granted to the Company in April.

During the reporting period, Cann has continued the commissioning of the Satipharm capsule manufacturing line. Satipharm sales increased in March following the agreement reached with Medlab Clinical Ltd (Medlab) in February to market Satipharm products to doctors.

Left: Our unique, patented microspheres in production at Cann's Mildura facility and right: a newly manufactured batch of Satipharm capsules.

Mildura facility

During the quarter Cann also announced that its new state-of-the-art production facility near Mildura had reached practical completion, which, combined with the granting of the ODC permit referred to above, enabled the commencement of cultivation activities on site during the quarter.

The Mildura facility is the most technologically advanced, large-scale medicinal cannabis cultivation and production facility in Australia. The cultivation area incorporates a closed system micro climate-controlled glasshouse to optimise plant growth cycles and multiple integrated automation systems including:

• • automated climate control providing heating and cooling systems to balance temperature, airflow and humidity;

• • a mobile table system ensuring plants are in the best position for climate, irrigation, light and growth at all stages in the growth cycle;

• • state-of-the-art lighting technology;

• • automated screening system with up to 99.9% effective blackout to maximise crop cycles, energy savings and provide plant protection;

• • multiple-stage water filtration, irrigation and nutrient delivery system featuring full recirculation and cultivar-specific feeding.

The TGA conducted an audit of Mildura's laboratory, resin extraction and Satipharm manufacturing line and the Company continued to work with the TGA during the quarter to progress the GMP licencing of these parts of the facility.

During the quarter, a total of seven new personnel commenced working at the Company's Mildura facility, bringing the number of employees based at Mildura to 22. Further staff members are scheduled to commence during April 2022 as the facility becomes fully operational.

Clinical trial and S3 product registration program

In February the Company announced that the recruitment of patients for its phase 3 clinical trial examining the efficacy of its proprietary CBD-Satipharm capsule for the short-term treatment of sleep disturbances and quality of life outcomes would begin in March. The clinical trial is a randomised, double blind, placebo-controlled study and part of a registration program undertaken by Cann to secure an Australian approval for a Schedule 3 (S3) over-the-counter cannabidiol (CBD) product.

Recruitment of patients is well underway with initial patients enrolled in the trial by the end of the quarter and strong levels of interest from potential participants. The trial involves at least 212 patients being randomly placed into four cohorts receiving one of three different doses of the Satipharm CBD formulation, or a placebo. Patients are being treated for four weeks, and results of the trial are anticipated to be released later in 2022, in line with Cann's S3 registration program. Clinical trial sites are in most major capital cities in Australia and further information on the trial is availablehere.

Research and Development highlights

Research and development highlights during the reporting period include:

• • The first commercial crop of Cann's new high THC elite cultivar that was generated through the R&D selection program has been harvested with an increase of approximately 40% in THC levels and bud yields compared to the Company's standard THC cultivar.

• • Cann's Mildura laboratory analysed flowers harvested from the second phase high CBD trial and the Company has selected a new elite CBD cultivar which will proceed into a commercial trial. This new cultivar shows a significant improvement in bud yield and CBD level compared to Cann's standard CBD cultivar.

• • Further, seed from the first breeding crosses performed by Agriculture Victoria (AgVic) are ready to be delivered to Cann's facilities. The second breeding cycle has commenced with the newly characterised and improved cultivars from Cann's trials having been delivered to AgVic labs during this reporting period.

Board and management changes

On 17 February 2022, Mr Geoff Pearce stepped down from the Board having served as a director since April 2016. The Board is continuing to review its skills base needs to determine whether to appoint a new director and, if so, the recruitment process that will be undertaken.

Mr Rhys Cohen will be joining the Company in the role of Senior Corporate Communications Manager with effect from 2 May 2022. Mr Cohen was most recently editor-at-large atCannabiz,Australia's leading B2B industry publication. He sits on the non-executive advisory board of the Lambert Initiative for Cannabinoid Therapeutics at the University of Sydney.

Subsequent events

The following events have occurred subsequent to the end of the reporting period:

• • In April, the UK Food Standards Agency (FSA) included the Satipharm range of Advanced CBD capsules in the list of approved products permitted to be sold in the UK, presenting a major opportunity for Cann to substantially grow sales of Satipharm products within the UK market.

• • Cann has entered into an agreement with GSK Consumer Healthcare to enable GSK Consumer Healthcare to evaluate the distribution and marketing of Cann's CBD capsules in Australia and potentially other global markets. In parallel with the evaluation, both parties will enter into negotiations on an exclusive agreement for the marketing, sale and distribution of the Satipharm CBD product in Australia. GSK Consumer Healthcare also has potential interest in taking up commercialisation rights for markets outside of Australia. The key terms of any definitive sales and marketing agreement are contingent on several factors, including the results of Cann's Phase 3 clinical trial and regulatory approval, as well as GSK Consumer Healthcare's evaluation. Further details about this agreement can be found in the Company'sannouncement dated 6 April 2022.

• • The ODC has granted Cann the necessary permit to allow the manufacture of medicinal cannabis products at Cann's Mildura facility.

• • Cann announced that commercial cultivation has now officially commenced at the new Mildura facility, with the Company's first commercial crop now growing on site. This crop is expected to be harvested in June 2022.

• • Cann has entered into a $15 million working capital facility with National Australia Bank (NAB), as well as re-negotiating the Company's existing $50 million facility as it converts to an amortisation loan.

CEO comment

Cann Group's CEO, Peter Crock, said: "The March quarter encompassed the achievement of key milestones in respect of our manufacturing capabilities and scale; our regulatory approvals; our R&D programs; and progress associated with our pivotal S3 clinical trial. That positive momentum has continued into the early part of this current quarter, with the signing of the agreement with GSK Consumer Healthcare, the UK approval of our Satipharm product range and the commencement of commercial cultivation activity at Mildura. To capitalise on these achievements, we are now prioritising a stronger focus on sustainable sales growth as we look to meet increasing demand from both the domestic Australian market and markets overseas."

Cann Group Limited

Authorised for release by the Board of Directors of Cann Group Limited.