TORONTO -- Aurora Cannabis Inc.'s friendly $3.2-billion all-stock deal to acquire MedReleaf Corp. marks the biggest transaction to date in Canada's nascent marijuana industry and creates what MedReleaf's CEO describes as "the undisputed world leader in cannabis".

The transaction will create a cannabis behemoth capable of producing more than 570,000 kilograms of marijuana per year, the companies said Monday, as the country moves to legalize recreational pot later this year.

However, the deal is a global play to scale up and compete on the international stage, and capitalize on the larger medical marijuana opportunity, said Aurora's chief executive Terry Booth.

"This deal checks every box," Booth said at a press conference in Toronto discussing the transaction. "We're leaders in every box now, and we're not looking back and we're not going to stop here."

Neil Closner, the chief executive of Markham, Ont.-based MedReleaf, said the deal gives its shareholders an immediate premium and an opportunity for upside.

"This combination makes the two of us now the undisputed world leader of cannabis," he said at the joint press conference.

Edmonton-based Aurora and MedReleaf had confirmed on May 3 they were in discussions but had no agreement at the time.

The deal, which is subject to shareholder approval, is the latest sign of consolidation in Canada's cannabis sector. Aurora has been particularly active, having recently completed its $1.1-billion acquisition of Saskatoon-based licensed producer CanniMed, which had been the biggest deal in the sector prior to Monday's announcement. Aurora and CanniMed struck a stock-and-cash deal in January after an at-times terse takeover battle.

If the friendly deal is completed, current shareholders of Aurora would own 61 per cent of the combined company and MedReleaf shareholders would own about 39 per cent.

Meanwhile, rival cannabis company Canopy Growth Corp. announced separately on Monday that it has a non-binding agreement to buy the remaining 33 per cent stake of BC Tweed Joint Venture Inc. in return for up to $374 million worth of its shares. Canopy also announced it has applied to list its common shares on the New York Stock Exchange.

The deal implies a price of $29.44 per MedReleaf common share, 18 per cent above the Friday closing price of $24.90.

The companies will have nine production facilities in Canada and two in Denmark and distribution agreements with Alcanna liquor stores in Alberta, SAQ provincial liquor stores in Quebec, Pharmasave and Shoppers Drug Mart.

The boards of both companies have approved the transaction but the deal requires approval by at least two-thirds of MedReleaf shareholders and a simple majority of Aurora shareholders.

Vahan Ajamian, an analyst with Beacon Securities, said this was the biggest deal in the Canadian cannabis sector yet. He viewed the deal as positive for MedReleaf shareholders.

"MedReleaf's shareholders will be getting a healthy premium," he said in a note. "We believe this development will spark M&A enthusiasm across the sector."

In February, rival licensed producer Aphria Inc. completed its acquisition of B.C.-based Broken Coast Cannabis Inc., a transaction valued at more than $200-million in stock and cash.