FSD Pharma Inc. Announces $55 Million Indoor Cannabis Grow Partnership Expansion at Its Cobourg Facility

TORONTO, July 3, 2018 /CNW/ - PRESS RELEASE - FSD Pharma Inc. (CSE:HUGE) has provided an update on the progress of the joint venture between its wholly-owned subsidiary, FV Pharma Inc. and Auxly Cannabis Group Inc.

The first phase of the build-out of the FV Pharma facility in Cobourg, Ontario has been approved in an updated construction and development budget provided by Auxly. Of the current 620,000 square feet of building space available, 220,000 square feet will be developed and fully funded. As part of this project, Auxly will contribute $55,000,000 to build out the Facility.

The 220,000 square feet of cultivation and ancillary space will include a research and development lab focused on advancements in LED lighting, nutrient testing, breeding and genetics research. The first phase will also contain a dedicated space for large-scale extraction capabilities. The company expects first phase construction to be completed and ready for Health Canada approval by the end of December 2018. Pending regulatory approval, the company expects to plant the first harvest in the first phase by the end of January 2019. FSD retains a 50.1-percent stream (after all operating expenses are recovered plus a ten percent profit is paid to FSD) of all cannabis and cannabis-derived products produced at the facility, under partnership with Auxly, in perpetuity.

As part of the updated construction budget, the facility will implement several technological advancements in order to increase energy efficiency and post-harvest process automation. These advancements are anticipated to benefit the environment and the community of Cobourg through less demand on the local electricity grid and will reduce operating expenses to the company.

Thomas Fairfull, president and CEO of FSD Pharma, commented, "We are pleased to be working in partnership with Auxly to build out our facility in Cobourg. The first phase of our expansion plans sets the foundation for the continued development of a potential 3,800,000 square feet at the former Kraft plant. We have taken a significant step forward in delivering low-cost, high-quality pharmaceutical-grade cannabis at scale, and to achieving our company mission to build the largest hydroponic indoor cannabis facility in the world."

"Our investment in this significant project in Cobourg demonstrates our commitment as a company to cultivating the highest quality cannabis at scale while effectively managing operating costs in a competitive marketplace," stated Chuck Rifici, chairman and CEO of Auxly. "The market opportunity in Canada is sizable and Auxly is well positioned to secure a market leader position."