After acquiring a Uruguay-based CBD company for $15 million earlier this month, Auxly Cannabis Group (TSXV: XLY; OTCQX: CBWTF) is expanding by acquiring a stake in an Ontario cannabis company.

Auxly just announced details on an agreement to purchase slightly less than half the common shares of Curative Cannabis.

Under the terms of the deal, Auxly will acquire a 46% stake in Curative in exchange for 5 million common shares, and will further gain the right to purchase 50% of any cannabis product produced by Curative.

Auxly’s President and Director Hugo Alves had this to say about inking the deal with Curative:

We could not be more pleased to reach this stage of the project and to sign a definitive agreement. Curative’s optimization of indoor cultivation combined with their unique genetics will provide a highly desirable product offering to the Canadian recreational cannabis markets and to the Auxly platform as a whole.

The partnership sees Auxly entering into an agreement to assist in the construction of a new Curative cultivation facility based in Chatham-Kent. Auxly additionally gains a right of first refusal for any future expansions to that facility.

In its first phase of construction, that indoor facility currently consists of 30,000 sq. ft. of cultivation space situated on a 33-acre plot of land. Curative has received local municipal approval to expand up to 120,000 sq. ft. when construction is finalized.

As this first phase is completed, Auxly and Curative have estimated the ability to produce 2,900kg of cannabis product yearly across a 90-strain genetic library.

This is the second major cannabis cultivation facility project Auxly has entered into in recent months. Just a handful of days after the Cannabis Act went into effect in late October, the company also signed an agreement with Atlantic Cultivation to construct a 110,000 sq. ft. grow facility located in St. John’s, Newfoundland and Labrador.

Constructing new grow facilities licensed under the Cannabis Act or the Access to Cannabis for Medical Purposes Regulations remains a top priority for companies across the newly legalized industry.

As illegal, non-licensed sources continue to undercut the price of legal outlets, supply has consistently remained too low to meet demand from licensed provincial or private retailers.