As we start down the homestretch toward full recreational legalization in the “Cannada”, speculation is beginning to circulation about possible M&A activity coming from above, out in the wider world of mid and large-cap stocks in compatible areas, with Aurora Cannabis Inc (OTCMKTS:ACBFF) being floated as a ripe fruit on the tree. Among other catalysts, the company just commented on the granting of Royal Assent to Bill C-45, the Cannabis Act.
According to the release, “With Royal Assent received, the legislation legalizing cannabis for adult consumer use has now passed its final official step, and retail sales are to commence October 17, 2018, as announced by Canada’s federal government yesterday.” This comes in concert with speculation captured in a Bloomberg article that Molson Coors is sniffing around at a potential acquisition bid for one of the heavyweights in the Canadian cannabis space, with Aurora at the forefront of that conversation.
Aurora Cannabis Inc (OTCMKTS:ACBFF) is a licensed producer of medical marijuana pursuant to the Marijuana for Medical Purposes Regulations and operates a 55,200 square foot expandable state-of-the-art production facility in Alberta, Canada.
ACBFF’s wholly-owned subsidiary, Australis Capital Inc., seeks to be an active participant in the U.S. Cannabis market. Aurora is trading on the Canadian Securities Exchange under the trading symbol “ACB”. The company is headquartered in Vancouver, Canada.
According to company’s materials, “Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations. The Company operates a 55,200 square foot, state-of-the-art facility in Mountain View County, Alberta, is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport, and has acquired, and is undertaking completion of a third a 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island. In addition, the Company holds approximately 9.6% of the issued shares (12.9% on a fully-diluted basis) in leading extraction technology company Radient Technologies Inc., based in Edmonton, and is in the process of completing an investment in Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1%. Furthermore, Aurora is the cornerstone investor with a 19.9% stake in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union, based in Germany.”
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Recent action has seen 13% tacked on to share pricing for the company in the past month. What’s more, the stock has witnessed a pop in interest, as transaction volume levels have recently pushed 34% above the average volume levels in play in this stock over the longer term.
“The granting of Royal Assent today ends nearly a century of cannabis prohibition, marking a truly historic moment for all Canada, for Canadian public policy, and for this country’s cannabis sector,” said Terry Booth, CEO. “International delegates have been coming to Canada for years to study our medical cannabis system, which is globally renowned for its efficiency and success. Canada’s legal framework is increasingly serving as a model for other countries looking to implement their own medical cannabis legislation. With the Cannabis Act, Canada further establishes its global leadership as the only G7 country to legalize adult consumer use. The federal government has provided intelligent and rational public policy focused on clearly defined objectives that will reduce the negative impact of prohibition, while establishing a well-regulated system designed to protect youth, public health and public safety. Aurora is proud to be a leader in this new industry, both as a producer of high-quality cannabis, and as an advocate for fairness and justice, including amnesty on past non-violent cannabis-related offenses, and on achieving tax-exempt status for medical cannabis.”
Earning a current market cap value of $3.97B, ACBFF has a significant war chest ($231M) of cash on the books, which compares with about $2.6M in total current liabilities. One should also note that debt has been growing over recent quarters. ACBFF is pulling in trailing 12-month revenues of $42M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 211.1%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $ACBFF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $ACBFF, either long or short, and we have not been compensated for this article.