Imperial Brands will invest CAD 123 million (USD 93.6 million) in Auxly Cannabis Group Inc., a listed Canadian cannabis company, according to a company press release.

Imperial will invest CAD 123 million (USD 75 93.6) by way of a debenture convertible into 19.9 per cent of Auxly's current share capital at a price of CAD 0.81 (USD 0.62) per share. Imperial said, the transaction grants Auxly global licenses to Imperial's vaping technology and research and development capabilities for cannabis use. The shared ability to rapidly innovate as the Canadian market evolves is key to future growth and Auxly will work closely with a small dedicated team from Nerudia in developing a portfolio of new and enhanced brands and products, the company said.
According to the press release, legalised cannabis is a highly regulated adjacent sector to tobacco. Following an extensive evaluation of the Canadian market Imperial selected Auxly as “its partner of choice due to the high calibre of its assets, people and capabilities”. Imperial’s investment will accelerate the delivery of Auxly’s business plan ahead of significant regulatory change to the Canadian cannabis market in October 2019.
“Diversifying our NGP portfolio with this investment provides Imperial with further options for future growth and builds on last year’s investment in Oxford Cannabinoid Technologies. Auxly’s unique assets and capabilities, including strong science and product development credentials, make it an ideal partner for Imperial in the legal Canadian cannabis market,” Matthew Phillips, Imperial’s Chief Development Officer, was quoted as saying.
The legal Canadian cannabis market is currently estimated at CAD 3 billion (USD 2.3 billion) per year and is expected to grow to approximately CAD 10 (USD 7.6 billion) billion by 2025. The market for derivative cannabis products is expected to reach CAD 6 billion (USD 4.6 billion) by 2025, the press release said.