Auxly and Delta 9 Announce Strategic Investment and Supply Agreement

VANCOUVER, British Columbia, Sept. 06, 2018 (GLOBE NEWSWIRE) -- Auxly Cannabis Group Inc. (TSX.V - XLY) (OTCQX:CBWTF) ("Auxly") and Delta 9 Cannabis Inc. (TSX.V -NINE) (“Delta 9”) are pleased to announce that the parties have entered into definitive agreement (the “Agreement”) whereby Auxly will make a strategic investment to fund the expansion of Delta 9’s licensed cannabis cultivation facility in Winnipeg, Manitoba (the “Facility”) and provide general working capital to Delta 9.



Pursuant to the Agreement, Auxly has subscribed for 5,909,090 common shares of Delta 9 (each a “Delta 9 Share”) at a price of $2.75 per Delta 9 Share, representing a total investment of $16,250,000. In exchange, Auxly will receive the right to purchase a fixed amount of dried cannabis and cannabis trim from the Facility and its expansion for a period of 10 years. Effective January 1, 2019 and until January 1, 2029, Auxly will have the right to purchase 1,000 kilograms of dried cannabis per annum as well as 100 kilograms of cannabis trim. In addition, effective July 1, 2020 and until July 1, 2030, Auxly will have the right to purchase an additional 4,000 kilograms per annum as well as 400 kilograms of cannabis trim.

Auxly and Delta 9 will jointly work to negotiate and enter into a supply agreement for the creation and supply of certain value-added cannabis products from Auxly’s wholly owned subsidiary, Dosecann Inc. (“Dosecann”) as well as a retail collaboration agreement whereby the parties will pursue various retail collaboration opportunities.

Hugo Alves, President of Auxly, commented, “As the Auxly platform has matured, so have the depth of our relationships and the caliber of our partnerships. Today, we are incredibly pleased to be announcing this strategic partnership with Delta 9, a high-quality cannabis operator we have admired since the early days of medical cannabis legalization. We believe this partnership provides an incredible opportunity for us to collaborate to affirm our commitments to our medical patients but also to work together to develop a robust retail platform for the recreational market across Canada. We look forward to working with John and his team at Delta 9 as we move into legalization.”

John Arbuthnot, Chief Executive Officer of Delta 9, commented, “This financing and strategic agreement is one more piece of the puzzle for our company as we prepare for legalization in Canada, and our upcoming expansion into Canadian and international markets. The Auxly subscription follows the recent Delta 9 announcement of a loan agreement with a Tier 1 Canadian chartered bank for $12,000,000, and the $23,000,000 prospectus financing in December 2017. We are now well funded not only for our current phase of expansion through 2019 but have a war chest we can use to seize new opportunities that Delta 9 has been working on for several months. Our partners at Auxly are leaders in the global cannabis industry, and among the most knowledgeable and influential companies in the space. We feel the partnership will be of great benefit to Delta 9, to Auxly, and to the subsidiaries that Auxly owns.”

ON BEHALF OF THE AUXLY BOARD

"Chuck Rifici" Chairman & CEO

ON BEHALF OF THE DELTA 9 BOARD

"John William Arbuthnot IV" CEO

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

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 Delta 9 Cannabis Inc. (TSX.V: NINE)

Delta 9’s wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical marijuana pursuant to the ACMPR and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9’s shares trade on the TSX Venture Exchange under the symbol “NINE”.

Investor Relations:

For more information about investing in Auxly Cannabis Group, 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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Follow up on Twitter @Auxlygroup

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

Gary Symons (Delta 9)

Director of Communications

Email: communications@delta9.ca

Phone: 250.300.9352

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: expectations of future growing capacity at the Facility and the related costs, the completion of the planned build-out and expansions, requirements to obtain additional financing for such build-out and expansions, the ability to satisfy the conditions associated with the Facility’s sales license, timeliness of government approvals for granting of permits and licenses, actual operating performance of the Facility, regulatory or political change, competition and other risks affecting Auxly and Delta 9 in particular and the cannabis industry generally.

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: the supply agreement between Delta 9 and Dosecann is ever completed, the retail collaboration between Delta 9 and Auxly is ever completed, either Delta 9 or Auxly being unable comply with its respective obligations under the Agreement, and general economic, financial market, regulatory and political conditions in which Auxly and Delta 9 operate will remain the same. Additional risk factors are disclosed in: (i) the revised annual information form of Auxly for the financial year ended December 31, 2017 dated May 24, 2018; and (ii) the annual information form of Delta 9 for the financial year ended December 31, 2017 dated May 31, 2018.

New factors emerge from time to time, and it is not possible for management of each of Auxly and Delta 9 to predict all of those factors or to assess in advance the impact of each such factor on Auxly or Delta 9'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 of each of Auxly and Delta 9 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 each of Auxly and Delta 9. The purpose of forward-looking information is to provide the reader with a description of each of Auxly and Delta 9's 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, each of Auxly and Delta 9 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.