News Release

Auxly Announces Cultivation Optimization Plan and Related Cost Savings Initiatives

Auxly Cannabis Group Inc. (TSX – XLY) (“Auxly” or the “Company”), a leading consumer packaged goods company in the cannabis products market, announced today that the Company has closed its Robinsons cultivation facilities located in Kentville and Hortonville, Nova Scotia, as the Company continues to focus its efforts on streamlining and simplifying its cultivation platform, reducing costs and achieving its goal of becoming adjusted EBITDA positive by the first half of this year.

This strategic decision comes after careful consideration in identifying opportunities for the Company to optimize its vertically integrated platform and effectively reduce operating costs, while ensuring no material impact on its cultivation or processing capabilities and forecasted sales revenue. Through streamlining its cultivation footprint, the Company will be able to focus efforts and resources on optimizing the output of high-quality cannabis from its newly acquired large-scale greenhouse cultivation facility located in Leamington, Ontario. Auxly Leamington, formerly called Sunens Farms Inc., is a 1.1 million sq. ft. facility producing unique cannabis strains that are currently being used in the Company’s full suite of industry-leading branded cannabis products. Auxly Leamington also provides the Company with considerable additional cultivation, storage, processing and manufacturing space, affording Auxly the ability to scale its operations in concert with the increasing demand for its portfolio of quality branded products and gain further economies of scale.

Robinsons Cannabis Incorporated, located in Kentville, Nova Scotia, operated a 27,700 sq. ft. indoor cultivation facility that focused on the production of high-quality craft cannabis. Robinsons Outdoor Grow Incorporated (“Robinsons OG”) is an outdoor cannabis cultivation project comprised of over 158 acres of land located in Hortonville, Nova Scotia. The Company never commenced cultivation activities at Robinsons OG, instead utilizing the space for additional storage and processing capacity. The Company intends to divest these non-core assets and apply the proceeds from any such sale to support Auxly’s ongoing operations.

“While we believe that taking these steps ultimately makes Auxly a more focused company that is better positioned to achieve its strategic goals, it was an extremely difficult decision because of the impact on our talented and hard-working Robinsons employees. We are grateful for all of their efforts and will do our best to help support them through this period of transition,” said Hugo Alves, CEO of Auxly. “We are diligently working to ensure that we achieve our goal of reaching adjusted EBITDA positive by the first half of 2022 and deliver stable and profitable financial performance for our stakeholders. Optimizing our vertically integrated platform allows us to strengthen our capital position, increase the overall efficiency of our operations and enhance our ability to continue to meet the growing demand for Auxly branded products.”

ON BEHALF OF THE BOARD

Hugo Alves” CEO

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

Auxly is a leading Canadian cannabis company dedicated to bringing innovative, effective, and high-quality cannabis products to the 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/.

Investor Relations:

For investor enquiries please contact our Investor Relations Team: 
Email: IR@auxly.com
Phone: 1.833.695.2414

Media Enquiries (only): 

For media enquiries or to set up an interview please contact:
Email: press@auxly.com 

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 Company and its subsidiaries; the Company’s efforts to streamline its cultivation operations and reduce operating costs; the intention of the Company to sell the non-core assets and the proposed use of any proceeds; the Company’s execution of its product development, commercialization strategy and expansion plans; the relevance of the Company’s current and proposed products; the expectation and timing of future revenues; 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 is able to execute on its business strategy; the Company is able to sell the non-core assets; the Company is able to achieve the anticipated cost savings from the closure of the facilities; the Company’s subsidiaries are able to maintain the necessary regulatory authorizations to conduct business; there is acceptance and demand for current and future Company products by consumers and provincial purchasers; 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, 2020 dated April 23, 2021.

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. 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 Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.