Auxly Cannabis Group Inc. (TSX.V: XLY)(OTC:CBWTF) announced Thursday it will receive $123 million investment by way of a convertible debenture from tobacco giant Imperial Brands PLC (OTC:IMBBY). Imperial Brands will provide Auxly with a global Imperial Brands’ vaping technology and access to its vapor innovation business, Nerudia.

The debenture is convertible into 19.9% ownership of Auxly at a conversion price of 81 cents per share. It has a three-year term with a fixed interest rate of 4% annually.

Imperial Brands gained the option to convert the debenture into Auxly’s shares at any time during the term, after which, if not converted, the debenture will be repayable.

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Auxly also agreed to nominate for election to its Board of Directors one of five director nominees and one non-voting observer, both to be chosen by Imperial Brands.

Auxly and Imperial Brands will form a Commerical Cooperation with an equal number of representatives from both companies, which will serve to advance this R&D partnership.

"This investment from Imperial Brands will enhance Auxly’s ability to continue to deliver on our business plans and accelerate our growth initiatives to expand our portfolio of branded derivative products," said Hugo Alves, President of Auxly. "The timing is ideal as we prepare to bring our portfolio of innovative cannabis products to the Canadian market following the legalization of edibles, extracts and topicals later this year."