IM Cannabis Corp. Enters into Letter of Intent to Sell its European Activities, Expects to Significantly Reduce Debt by CAD$10.5 million

IM Cannabis Corp. ("IMC" or the "Company") (NASDAQ: IMCC), a medical cannabis company with operations in Israel and Germany, is pleased to announce that it has entered into a non-binding letter of intent (the "Letter of Intent") with Slil.com Holding Ltd., a privately-held Israeli entity beneficially owned and controlled by Oren Shuster, the Company's Chief Executive Officer, a director and debtholder of IMC ("Slil"), pursuant to which the Company has agreed to sell to Slil its European-focused assets (the "Transaction").Pursuant to the terms and conditions of the Letter of Intent, the Company will sell its wholly owned subsidiary, I.M.C. Holdings Ltd. ("IMC Holdings"), to Slil, which, following a pre-closing reorganization, will primarily hold the Company's European operations, including Adjupharm GmbH in Germany, as well as the Company's interests in Xinteza API Ltd. and Shiran Societe Anonyme.In consideration for the sale of all the issued and outstanding shares in the capital of IMC Holdings, Slil will assume an aggregate of approximately C$10,500,000 of debt held by the Company and IMC Holdings, comprised of C$7,500,000 in retained liabilities and an additional C$3,000,000 in certain short-term liabilities, significantly reducing IMC's debt burden.Following the completion of the Transaction, IMC will retain its core Israeli operations, primarily through its subsidiaries Focus Medical Herbs Ltd., Rosen High Way Ltd., R.A. Yarok Pharm Ltd., and Rivoly Trading and Marketing Ltd., allowing the Company to concentrate its resources on the Israeli market while pursuing potential additional investment opportunities and streamlining its corporate structure.The Company believes that the proposed Transaction, if and when completed, may lead to a substantial debt reduction of C$10,500,000, improved working capital and balance sheet strength, enhanced cash flow, focus on operational efficiency and expected positive impact on long-term shareholder value.In connection with the Transaction, the board of directors of the Company (the "Board") has commissioned (x) a special committee of the Board comprised solely of independent directors (the "Special Committee") to review and evaluate the Transaction; and (y) Beta Finance T.Y.S Ltd., a leading financial consulting company in Israel and an arm's length independent third-party, to prepare a report to assist with determining the fairness of the Transaction.The Transaction remains subject to the negotiation and execution of a definitive agreement (the "Definitive Agreement"), approval by the Special Committee, regulatory clearances, if required, and satisfaction of other customary conditions. Amongst other terms and conditions, the Letter of Intent is also subject to a certain exclusivity period.Related Party TransactionThe Transaction constitutes a "related party transaction", as such term is defined in Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions ("MI 61-101"), due to the involvement of Slil a privately-held Israeli entity beneficially owned and controlled by Oren Shuster, a related party to the Company, and as such requires the Company to receive minority shareholder approval for, and obtain a formal valuation for the subject matter of, the transaction in accordance with MI 61-101, prior to the completion of such transaction, unless the Company is able to rely on exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101.In completing the Transaction, the Company intends to rely on exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101, on the basis of subsections 5.5(g) and 5.7(1)(e) – Financial Hardship, as the Company is (i) in a situation of serious financial difficulty; (ii) the Transaction is designed to improve the financial position of the Company; (iii) the circumstances described in Section 5.5(f) of MI 61-101 are not applicable; (iv) the Board, acting in good faith, and the Special Committee, which is comprised solely of independent directors representing more than two-thirds of the Company's independent directors, acting in good faith, have determined that (i) and (ii) apply and that the terms of the Transaction are reasonable in the circumstances of the Company; and (v) there is no requirement, corporate or otherwise, to hold a meeting to obtain any approval of the holders of any class of affected securities. As a means of good governance, the Board has commissioned (x) the Special Committee to review and evaluate the Transaction; and (y) Beta Finance T.Y.S Ltd., a leading financial consulting company in Israel and an arm's length independent third-party, to prepare a report to assist with determining the fairness of the Transaction. Further details will be included in a material change report to be filed by the Company.

IM Cannabis Corp. Enters into Letter of Intent to Sell its European Activities, Expects to Significantly Reduce Debt by CAD$10.5 million

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