TORONTO, June 29, 2020 — Auxly Cannabis Group Inc. (TSX.V – XLY) (“Auxly” or the “Company”), a consumer packaged goods company in the cannabis products market, today provided an update on the Company’s national and international cultivation strategy. The Company is pleased by the progress of its cultivation portfolio, which is instrumental in supplying a secure, cost-efficient and consistent source of input material for the Company’s growing portfolio of cannabis products. In order to sharpen the Company’s near-term focus on Cannabis 2.0 dominance in Canada, the Company has decided to rationalize its cultivation portfolio by focusing on its domestic cultivation, while maintaining optionality in Uruguay.
Sunens Farms Inc.
On June 15, 2020, the Company announced that Sunens Farms Inc. (“Sunens”), the Company’s organic cultivation joint-venture with legendary greenhouse operator Peter Quiring, secured a standard cultivation licence from Health Canada for the first phase of its fully automated, purpose-built, 1.1 million sq. ft. greenhouse facility in Leamington, Ontario. The first phase of the licensed area includes approximately 360,000 sq. ft. of cultivation, processing, and storage space, with the additional licence amendments for the remaining phases being submitted throughout the course of 2020.
Since announcing receipt of the cultivation licence, the Sunens team has already commenced cultivation of organic cannabis within the licensed area. Cannabis harvested from the Sunens facility will provide Auxly with a consistent, traceable source of low-cost, organic dried flower to support Auxly’s commercial strategy, including the manufacturing of Auxly’s branded cannabis products at its Dosecann facility in Prince Edward Island and continued product innovation.
The Company believes that the Sunens facility will be the cornerstone of its cultivation portfolio and, when fully operational, will produce approximately 100,000 kg of organic cannabis annually.
Robinsons Cannabis Inc.
On May 20, 2020, the Company announced that its wholly owned subsidiary, Robinsons Cannabis Inc. (“Robinsons”), received its sales licence from Health Canada, expanding Auxly’s product portfolio to include hand-crafted cannabis flower for the connoisseur market.
Since receipt of its cultivation licence, Robinsons has been growing small-batch cannabis at its 27,700 sq. ft. state-of-the-art facility in Kentville, Nova Scotia. Robinsons will release a selection of its favorite genetics in select Canadian provinces in July of 2020, each grown with an uncompromising commitment to quality, flavor and craftsmanship.
Robinsons Outdoor Grow Incorporated
On November 15, 2019, the Company announced the launch of Robinsons Outdoor Grow (“Robinsons OG”), a large-scale outdoor cultivation project located in Hortonville, Nova Scotia, with over 158 acres of land available for development.
Robinsons OG will provide the Company with access to organic, sun grown cannabis flower to help support the Company’s ongoing development of Robinsons branded cannabis products.
The Company is pleased to announce that Robinsons OG has secured a standard cultivation licence from Health Canada. However, given timing for the optimal outdoor planting season and the operational challenges posed by COVID-19, the Company has made the strategic decision to delay the commencement of cultivation activities at the Robinsons OG site and, instead, focus its efforts on the continued development of the Robinsons OG land and facility in preparation for the 2021 cultivation season.
Kolab Project Inc.
During 2019, the Kolab Project Inc. (“Kolab”) facility located in Carleton Place, Ontario, was focused on providing quality cannabis flower and pre-rolls to registered medical patients across Canada. In 2020, the Company made the strategic decision to cease cultivation at the Kolab facility and fully focus Kolab’s operations on pre-roll manufacturing and innovation activities to support the Company’s branded pre-roll product offering.
Inverell S.A. (“Inverell”) is the Company’s 80%-owned subsidiary located in Montevideo. Inverell has completed its 2019-2020 harvest which resulted in approximately 43,000 kilograms of packed hemp biomass. However, due to the slower than anticipated pace of cannabis-specific regulatory development in Latin America (“LATAM”) and, consequently, the slower development of viable near-term commercial channels in the region, the Company has chosen not to proceed with planting for the 2020-2021 growing season nor with the development of extraction capabilities with a view to reducing headcount and keeping operating expenditures to a minimum. This strategy will reduce future operating expenses by approximately $6-7 million annually, which can be redirected into the Canadian market with a view to driving more immediate revenue to Auxly. Auxly will maintain the optionality Inverell provides and continue to monitor the regulatory landscape in LATAM, while exploring extraction opportunities as well as sales channel opportunities for the current stored biomass into legally permissible jurisdictions.
ON BEHALF OF THE BOARD
“Hugo Alves“ CEO
About Auxly Cannabis Group Inc. (TSX.V: XLY)
Auxly is an international cannabis company dedicated to bringing innovative, effective, and high-quality cannabis products to the medical, wellness and adult-use markets. Auxly’s experienced team of industry first-movers and enterprising visionaries have secured a diversified supply of raw cannabis, strong clinical, scientific and operating capabilities and leading research and development infrastructure in order to create trusted products and brands in an expanding global market.
Learn more at www.auxly.com and stay up to date at Twitter: @AuxlyGroup; Instagram: @auxlygroup; Facebook: @auxlygroup; LinkedIn: company/auxlygroup/.
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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 proposed operation of the Sunens and Robinsons OG facilities; the timing for completion and licensing of the additional phases of the Sunens facility; production capacity, including discussions of plans or potential for expansion of capacity at existing or new facilities; expectations of future growing capability at the Robinsons OG project; the successful production and launch of Robinsons products; the Company’s execution of its product development and commercialization strategy; consumer preferences; political change, future legislative and regulatory developments involving cannabis and cannabis products; and competition and other risks affecting the Company 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 Company’s subsidiaries are able to maintain their current licences and are able to obtain and maintain all other necessary governmental and regulatory authorizations and permits to operate their facilities and conduct business, and whether such authorizations and permits can be obtained in a timely manner; Robinsons OG is able to successfully cultivate and harvest outdoor cannabis crops in Nova Scotia at the anticipated cost and yield; the acceptance and demand for current and future Company products by consumers and provincial purchasers; the Company is able to find new opportunities for the stored biomass in Uruguay; 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 annual information form of the Company for the financial year ended December 31, 2019 dated May 13, 2020.
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 Auxly’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 Auxly. 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, Auxly 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.
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