NZX-listed cannabis research company Cannasouth said it had entered a joint venture with Kapiti-based businessman Aaron Craig to develop a cannabis cultivation facility in the Waikato.

The deal will involve Cannasouth issuing 2.8 million fully paid shares to the Craig Family Interests at 36c.

Cannasouth shares, which debuted on the NZX in June at 51c, last traded at 35.5c.

The placement will generate $1m of new capital for Cannasouth, and the company will in apply apply proceeds to the capital commitment to the joint venture.

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The joint venture will construct and operate a medicinal cannabis and hemp cultivation and production facility to service and supply CBD's production requirements.

Cannasouth Cultivation will be owned equally by each of Cannasouth and Craig family interests.

The joint venture hybrid greenhouse cultivation facility and will grow medicinal cannabis and complementary product, primarily for Cannasouth, but potentially for other medicinal cannabis companies in New Zealand and internationally, Cannasouth said in a statement.

The joint venure will be structured as a joint venture company – each of CBD and the Craig Family Interests will hold a 50 per cent interest in Cannasouth Cultivation and will initially contribute $1m of paid up capital into the JV company for the first phase of the operations development.

Cannasouth and Craig have identified a suitable 45 hectare site for the construction of the facility in the Waikato.

The Craig Family Interests have agreed to purchase 100 per cent of the Land at their own cost and to lease such portion of the Land as required, to Cannasouth Cultivation.

The maximum term of the lease is 20 years; Cannasouth Cultivation will pay a commercial market rental for that part of the Land that it uses.

Cannasouth said the new shares woudl be issued over the next five trading days.

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The Craig Family Interests have agreed that the New Shares shall be escrowed for a period of 12 months from the date of their issue.

Founders Mark Lucas and Nic Foreman who together own 55.2 per cent of the company, have also agreed to enter into a similar escrow agreement.

Cannasouth is involved in biopharmaceutical research and development company and was established to focus on the commercial development of the medicinally beneficial attributes of cannabinoid compounds such as CBD, THC and associated chemicals produced by the cannabis plant.