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Inner Spirit Holdings Closes Initial Public Offering

Inner Spirit Holdings Closes Initial Public Offering, Concurrent Private Placements and Announces Commencement of Trading on the Canadian Securities Exchange

CALGARY, Alberta (July 31, 2018) – Inner Spirit Holdings Ltd. (“Inner Spirit” or “the Company”), is pleased to announce that it has closed its initial public offering (the “IPO”). The Company closed on the maximum gross proceeds under the IPO of $3,750,000 and issued 25,000,000 units of Inner Spirit (the “Units”). Each Unit consists of one common share in the capital of the Company (each, a “Unit Share”) and one-half of one common share purchase warrant (each whole common share purchase warrant, a “Unit Warrant”). Each Unit Warrant will entitle the holder thereof to acquire, subject to adjustment in certain circumstances, one common share in the capital of the Company (each, a “Warrant Share”) at an exercise price of $0.30 for a period of 24 months following the closing date, subject to certain adjustments. Leede Jones Gable acted as the Company’s sole agent under the Offering and received a fee equal to $375,000 and 2,500,000 Agent’s Options to acquire one Option Share at an exercise price of $0.15 for a period of 24 months following the closing date.

The common shares of Inner Spirit (“Common Shares”) will begin trading effective at the market open on August 1, 2018 on the Canadian Securities Exchange (“CSE”) under the symbol “ISH”.

The Company is now preparing to open the first wave of Spiritleaf locations in BC, Alberta and Saskatchewan upon legalization and receipt of the necessary permits. It will simultaneously continue the development of its own proprietary cannabis brands and explore other strategic investments. “Our shareholders, franchise partners, future customers, and the cannabis industry in general, have all been very receptive to our initiatives. We are looking forward to continuing to collaborate with all stakeholders to support ongoing success of the Company as we move toward the end of prohibition,” added Bondar.

Cross-Investment Agreement and Strategic Alliance Agreement with Newstrike

The Company simultaneously closed its investment agreement with Newstrike Brands Ltd. (TSXV:HIP) (“Newstrike”) (the “Newstrike Investment Agreement”), pursuant to which both Newstrike and Inner Spirit have acquired equity interests in each other and have entered into a strategic alliance agreement for the retail distribution of Up Cannabis products, and the creation and operation of Up Cannabis-branded customer lounges or “Experiential Hubs” in Spiritleaf stores.

Newstrike and Spirit Leaf will create and operate Up Cannabis Experiential Hubs within Spiritleaf’s stores. The store-in-store experiences will complement the existing Spiritleaf design elements and provide education about cannabis, showcase both companies’ love of music and their various community and charitable endeavours.

Newstrike made an aggregate investment in Inner Spirit valued at $2.25 million comprised of $1,125,000 in cash and 1,250,000 Newstrike common shares (the “Newstrike Shares”) issued at closing at a price of $0.90, which is equal to the five-day volume weighted average price (VWAP) calculated as at May 22, 2018, being the date that the investment agreement was executed. Newstrike has also issued 1,125,000 warrants to purchase Newstrike common shares (the “Newstrike Warrants”). The Newstrike Warrants have an exercise price of $0.99, a term of 24 months and will vest on a performance-based schedule triggered by the opening of a pre-determined number of future Spirit Leaf locations. The Newstrike Share and Newstrike Warrants are subject to a four month hold period.

In consideration for Newstrike’s investment in Inner Spirit, Inner Spirit issued Newstrike, 15,000,000 units of Inner Spirit (“Units”) on the same terms as such securities were offered under Inner Spirit’s IPO at a price of $0.15 per Unit. Each Unit was comprised of one common share of Inner Spirit and one-half of a common share purchase warrant, exercisable at $0.30 per share for a period of two (2) years following the date of issuance, subject to adjustment.

Auxly Investment Agreement and Strategic Alliance Agreement

Inner Spirit entered into an investment agreement and a strategic alliance agreement with Auxly Cannabis Group Inc. (“Auxly”) (TSXV:XLY) (formerly known as Cannabis Wheaton Income Corp.). Pursuant to the investment agreement, Auxly acquired 15,000,000 common shares of Inner Spirit in exchange for a cash payment of $350,000, 674,418 Auxly common shares, and 1,250,000 Auxly common share purchase warrants.  On February 6, 2018, Auxly exercised its right to acquire an additional 1,500,000 Inner Spirit common shares for $150,000 and on June 22nd purchased an additional 1,323,529 shares at .15/share for $198,529.35.   Auxly has exercised its right as part of the IPO and Newstrike closing to purchase an additional 7,058,824 Units (the “Auxly Units”), on the same terms as the IPO Units, for gross proceeds of $1,058,823.60. After closing of the Auxly private placement, Auxly will hold approximately 15% percent of the total issued and outstanding Inner Spirit common shares as of the date hereof. The common shares and warrants comprising the Auxly Units are subject to a four month hold period.

Inner Spirit also entered into a strategic alliance agreement that grants Auxly the exclusive right to supply up to 50 percent of Inner Spirit’s annual inventory requirements for any cannabis, cannabis-infused or cannabis-derived products to be sold at its retail dispensaries with a mutually agreeable profit-sharing arrangement relating to any such cannabis product sales.

About Inner Spirit

Inner Spirit is establishing a chain of recreational cannabis dispensaries under its Spiritleaf brand. Supporting local entrepreneurs by applying its award-winning franchise and retail models, Inner Spirit has more than 100 partnerships in place for Spiritleaf locations across BC, Alberta and Saskatchewan. Inner Spirit will also operate multiple corporate dispensaries. With a diverse portfolio of quality and curated lifestyle cannabis products – including Spiritleaf’s own locally sourced lines – Inner Spirit’s Spiritleaf is positioned to be an iconic Canadian brand and the most trusted source for recreational cannabis. More information can be found on Inner Spirit’s website at www.innerspiritholdings.com.

Forward-looking statements

This press release contains statements and information that, to the extent that they are not historical fact, may constitute “forward-looking information” within the meaning of applicable securities legislation. Forward-looking information may include financial and other projections which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Inner Spirit to be materially different from any future results expressed or implied by Inner Spirit, as well as statements regarding future plans, objectives or economic performance, or the assumption underlying any of the foregoing. In some cases, forward-looking statements can be identified by terms such as “may”, “would”, “could”, “will”, “likely”, “except”, “anticipate”, “believe”, “intend”, “plan”, “forecast”, “project”, “estimate”, “outlook”, or the negative thereof or other similar expressions concerning matters that are not historical facts. Examples of such statements include, but are not limited to, statements with respect to the objectives and business plans of the Company; the completion of the transactions contemplated by the Newstrike Investment Agreement the establishment of recreational cannabis dispensaries in BC, Alberta and Saskatchewan; the intention to grow the Company’s business and operations;  the legalization of cannabis for recreational use in Canada, including federal and provincial regulations pertaining thereto and the timing related thereof and the Company’s intention to participate in such market, if and when legalized; the competitive conditions of the industries in which the Company operates; and laws and any amendments thereto applicable to the Company. The forward-looking information contained in this press release are made as of this date hereof, and accordingly, are subject to change after such date. Inner Spirit does not assume any obligation to update or revise and forward-looking information, whether written or oral, that may be made from time to time by the Company or on its behalf, except as require by applicable law.

NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATION SERVICES PROVIDER HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

For further information please contact:

Investor Inquiries:

Darren Bondar, Chief Executive Officer

Inner Spirit Holdings Ltd.

(403) 930-9303

Darren.bondar@spiritleaf.ca

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