C21 Addresses Market Conditions to Shareholders

C21 Addresses Market Conditions to Shareholders
March 13, 2020

VANCOUVER (MO.Properties) – C21 Investments Inc. (“C21” or the “Company”) (CSE: CXXI andOTCQB: CXXIF) today released a shareholder letter from Sonny L. Newman, President and CEO, to the Company’s shareholders. The letter follows below and can also be accessed from the Company’s website at www.cxxi.ca.

March 13, 2020

Dear Fellow Shareholders,

I want to take this opportunity to comment on the very difficult market conditions at this time as well as any potential effect the Novel Coronavirus may have on our business operations. As I stated in my letter dated February 10, 2020, C21’s business remains strong. We continue to integrate where necessary and work on strengthening our balance sheet, including the acquisition of the recent Phantom Farms real estate. Further, we continue to consolidate our Oregon operations to our Bend locations, which will continue to decrease expenditures and lease liabilities moving forward, as well as free up extraction equipment for use in our Nevada operations. In the near term we will report our year-end financials that will highlight our continued strong operations.

C21 is one of only a handful of U.S. public multi-state cannabis operators that generates positive operating cash flow. We currently trade at just over 1x EV/Revenue1 (trailing quarter annualized) and our EV/EBITDA2 is approximately 5x (trailing quarter annualized), which places us well below our peers and represents a substantial disconnect between our share price and our financial performance. Our operations are self-sustaining, which is paramount in the difficult market conditions that the cannabis sector continues to face. We remain one of very few public companies to avoid a dilutive equity raise during the downturn in the sector. Since stepping in as CEO, I am proud of our track record to pivot and right-size the business to meet the changing dynamics of the sector. I am also proud of our work towards achieving short-term and long-term profitability benchmarks.

The Coronavirus is impacting businesses across the globe. In addition to focusing on the health and safety of our customers and employees as our paramount concern, we have also been proactive in supply chain procurement for packaging supplies in case of any interruptions. We are very fortunate to have a loyal customer base in both Nevada and Oregon, particularly our hyper-local customer base in Northern Nevada. For example, 95% of our Nevada retail customers are from in-state. In addition, 75% of our revenue is generated from our own in-house products, which is significant if there were to be any strain on third-party supply. To date, there has been no material difference in our customer transaction levels or consumer habits due to the Coronavirus.

There is little doubt that the cannabis sector has faced strong headwinds, which impacts all public cannabis companies despite their operating performance. And now the macro-economic tides are impacting all sectors based in large part on the significant and justified concerns over the Coronavirus. During these difficult times, we will continue to focus on strong business fundamentals. We are continuing to evaluate all strategic alternatives open to us to service our debt and fund future growth. Presently, our primary objective is to secure a favorable debt facility.

We recognize how difficult these current market conditions are on our shareholders and I would like to make a point of thanking you all for your continued loyalty under the circumstances. We believe the market will soon reward cannabis companies and by extension, their shareholders, that operate with sound fundamentals and discipline. Our executive team holds substantial equity in the Company and we will continue to work diligently with our top priority as the preservation of shareholder value.