Auxly Cannabis Group Inc. (TSX.V: XLY) (OTCQX: CBWTF) (“Auxly” or the “Company“) is pleased to announce that the Company has entered into a binding interim agreement (the “Agreement”) with Atlantic Cultivation Inc. (“Atlantic”), an applicant under the Access to Cannabis for Medical Purposes Regulations pursuant to which the parties will collaborate on the development of a 110,000 square foot indoor cultivation facility in St. John’s, Newfoundland and Labrador (the “Facility”) and on the development of retail locations in the province.

Atlantic was founded by a team with a long-standing commitment to building opportunities in the province of Newfoundland and Labrador. Pillars of local industry, Christopher J. Hickman, Tom Collingwood Sr., Cynthia Crosbie and the entire Atlantic team lend to the project decades of unparalleled strategic leadership and oversight from diverse business environments. Atlantic’s collective of entrepreneurs have employed thousands of people across the province throughout the last five generations and look forward to playing a key role in the growth of the province’s legal cannabis industry.

Pursuant to the Agreement, Auxly will invest $2,500,000 into Atlantic (the “Investment”) in exchange for a 50% equity stake in Atlantic and a long term right to purchase up to 30% of dried cannabis and cannabis trim produced at the Facility. Auxly will also provide strategic regulatory, infrastructure, design and cultivation support to assist Atlantic in obtaining its licence under the Cannabis Act and in opening retail locations in the province.

In tandem with the Investment, the founding shareholders of Atlantic will contribute an additional $2,500,000 in funding to the entity and, together with the Investment, such funds will be used towards the development of retail locations, upon obtaining the requisite approval from the government of Newfoundland and Labrador, and for general working capital purposes. Auxly and Atlantic will work collaboratively with the Government of Newfoundland and Labrador to obtain all required regulatory approvals to open and operate up to five cannabis retail locations within the province, one of which is expected to be located onsite at the Atlantic Facility. In connection with such retail locations, the parties will enter into a management services agreement whereby Auxly will oversee the operation of the retail stores.

In addition, Auxly and Atlantic have agreed to enter into a supply agreement for the development and supply of value-added cannabis products using cannabis cultivated at the Facility and developed and manufactured by Dosecann Inc., the Company’s wholly-owned Licensed Dealer in Prince Edward Island.

Hugo Alves, President and Director of Auxly commented: “We are excited to have entered into this partnership with Atlantic Cultivation, a company led by an excellent management team with deep roots in Newfoundland and Labrador. This strategic partnership adds significant depth to our operations in Atlantic Canada. This partnership with Atlantic, coupled with our premium craft producer Robinson’s Cannabis in Nova Scotia and our world class innovation and extraction hub at Dosecann in PEI demonstrates Auxly’s commitment to Atlantic Canada where we are building meaningful cannabis businesses that have a positive impact on the region.”

Christopher Crosbie, Chief Operating Officer of Atlantic commented: “The Atlantic Cultivation team and I are thrilled to collaborate with Auxly on this project at home. Atlantic and Auxly’s partnership was facilitated through a mutual passion and dedication to creating value in the cannabis industry and a commitment to investment in Atlantic Canada – in particular, Newfoundland and Labrador.

The Government of Newfoundland and Labrador has created an effective cannabis strategy which I feel will push the province to the forefront of the cannabis industry. The Auxly team bring a wealth of cannabis knowledge and expertise to our partnership, enhancing the provincial cannabis landscape and ensuring industry growth and job creation in Newfoundland and Labrador.”

Auxly also announces that it has granted 6,725,000 options to purchase common shares of the Company (the “Options“) to certain officers, employees and consultants of the Company pursuant to the Company’s stock option plan (the “Plan“). The Options granted to certain officers will vest in equal portions over the following two years. All of the Options are exercisable at a price of 1.24 per common share. The Options have a term of 10 years and are subject in all respects to the terms of the Plan and the requirements of the TSX Venture Exchange.

ON BEHALF OF THE AUXLY BOARD

“Chuck Rifici” Chairman & CEO

About Auxly Cannabis Group Inc. (TSX.V: XLY) (OTCQX: CBWTF)

Auxly Cannabis Group is a collective of entrepreneurs with a passion for the cannabis industry past, present and future. Our mandate is to facilitate growth for our partners by providing them with financial support and sharing our collective industry experience. Our partners all have different visions, voices and brand values, and all share a common goal—to build a world-class industry based on ethics, diversity, quality and innovation.

About Atlantic Cultivation Inc.

Atlantic Cultivation was founded by a team of experienced Newfoundland and Labrador entrepreneurs committed to producing quality craft cannabis on a commercial scale. As a vertically integrated company, we will utilize industry leading hydroponic technology to produce premium cannabis products made available in our own retail stores, with the intention of expanding to other markets. We enter this industry with Newfoundland and Labrador in mind and every decision will be made with an awareness of the impacts on its people. We strive to create meaningful employment for the people of Newfoundland and Labrador with a focus on gender equality, inclusiveness and diversity.

Investor Relations:

For more information about investing in Auxly Cannabis Group Inc., please visit: http://www.auxly.com or contact our Investor Relations Team:

Email: IR@auxly.com

Phone: 1.833.695.2414

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Media Enquiries (only):

For media enquiries or to set up an interview please contact:

Sarah Bain, VP External Affairs

Email: sarah@auxly.com

Phone: 613.230.5869

Notice Regarding Forward Looking Information:

This news release contains certain “forward-looking information” within the meaning of applicable Canadian securities law. Forward-looking information is frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or information that certain events or conditions “may” or “will” occur. This information is only a prediction. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking information throughout this news release. Forward-looking information includes, but is not limited to: the ability of the parties to enter into a definitive agreement, expectations of future growing capacity at the Facility and the related costs, the completion of the planned build-out of the Facility, requirements to obtain additional financing for such build-out, the proposed licensing of the Facility and the expected timing to obtain all necessary licenses required for the proposed operation of the Facility, timeliness of government approvals for granting of permits and licenses, actual operating performance of the Facility, the Company and Atlantic’s ability to obtain cannabis retail licences in Newfoundland and Labrador and to generate revenue from such cannabis retail licences, political change, future legislative and regulatory developments involving cannabis, competition and other risks affecting the Company and Atlantic in particular and the cannabis industry generally. By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company or the Facility to be materially different from those expressed or implied by such information and statements.

A number of factors could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward-looking information in this release including, but not limited to, whether: Atlantic is able to obtain and maintain a cultivation licence, the Facility can be completed in the manner currently proposed or at all, Atlantic can obtain all necessary governmental and regulatory permits and approvals for the Facility and the retail stores, and whether such permits and approvals can be obtained in a timely manner, and general economic, financial market, regulatory and political conditions in which the Company operates will remain the same. Additional risk factors are disclosed in the revised annual information form of the Company for the financial year ended December 31, 2017 dated May 24, 2018.

New factors emerge from time to time, and it is not possible for management to predict all of those factors or to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information. The forward-looking information in this release is based on information currently available and what management believes are reasonable assumptions. Forward-looking information speaks only to such assumptions as of the date of this release. In addition, this release may contain forward-looking information attributed to third party industry sources, the accuracy of which has not been verified by the Company. The purpose of forward-looking information is to provide the reader with a description of management’s expectations, and such forward-looking information may not be appropriate for any other purpose. Readers should not place undue reliance on forward-looking information contained in this release.

The forward-looking information contained in this release is expressly qualified by the foregoing cautionary statements and is made as of the date of this release. Except as may be required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.