Auxly Cannabis (TSXV:XLY) announced an initial agreement with Atlantic Cultivation to develop an indoor cultivation facility in St. John’s, Newfoundland and Labrador and to develop retail locations.
As quoted in the press release:
Pursuant to the Agreement, Auxly will invest $2,500,000 into Atlantic (the “Investment”) in exchange for a 50 [percent] equity stake in Atlantic and a long term right to purchase up to 30 [percent] 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.