For traders on the hunt for second and third tier opportunities to capitalize on stocks playing catch-up in the recent run in the cannabis patch, Auxly Cannabis Group Inc (OTCMKTS:CBWTF) is an interesting play. The company just announced that it has entered into definitive agreement with Delta 9 Cannabis Inc. (TSX.V -NINE) whereby Auxly will make a strategic investment to fund the expansion of Delta 9’s licensed cannabis cultivation facility in Winnipeg, Manitoba and provide general working capital to Delta 9.
Hugo Alves, President of Auxly, commented, “As the Auxly platform has matured, so have the depth of our relationships and the caliber of our partnerships. Today, we are incredibly pleased to be announcing this strategic partnership with Delta 9, a high-quality cannabis operator we have admired since the early days of medical cannabis legalization. We believe this partnership provides an incredible opportunity for us to collaborate to affirm our commitments to our medical patients but also to work together to develop a robust retail platform for the recreational market across Canada. We look forward to working with John and his team at Delta 9 as we move into legalization.”
Auxly Cannabis Group Inc (OTCMKTS:CBWTF) trumpets itself as an investment company that seeks to provide investor returns through streams and capital appreciation in the Canadian cannabis industry.
The company operates as a cannabis streaming company. It provides funding for cannabis facility expansions, operations, and initial construction in exchange for minority equity interests and a portion of the cultivation production.
The company was formerly known as Knightswood Financial Corp. and changed its name to Cannabis Wheaton Income Corp. in May 2017. Cannabis Wheaton Income Corp. was incorporated in 1987 and is based in Vancouver, Canada, and became known as Auxly Cannabis Group Inc over recent months.
According to company materials, “Auxly Cannabis Group is a collective of entrepreneurs with a passion for the cannabis industry past, present and future. Our mandate is to facilitate growth for our partners by providing them with financial support and sharing our collective industry experience. Our partners all have different visions, voices and brand values, and all share a common goal—to build a world-class industry based on ethics, diversity, quality and innovation.”
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As noted above, the company recently announced that that it has entered into definitive agreement with Delta 9 Cannabis Inc. (TSX.V -NINE) whereby Auxly will make a strategic investment to fund the expansion of Delta 9’s licensed cannabis cultivation facility in Winnipeg. In all, the chart shows 39% piled on for shareholders of the listing during the trailing month, but this action is running counter to the larger trend in the name.
Furthermore, the listing has benefitted from a jump in recent trading volume to the tune of 39% over the long run average.
John Arbuthnot, Chief Executive Officer of Delta 9, commented, “This financing and strategic agreement is one more piece of the puzzle for our company as we prepare for legalization in Canada, and our upcoming expansion into Canadian and international markets. The Auxly subscription follows the recent Delta 9 announcement of a loan agreement with a Tier 1 Canadian chartered bank for $12,000,000, and the $23,000,000 prospectus financing in December 2017. We are now well funded not only for our current phase of expansion through 2019 but have a war chest we can use to seize new opportunities that Delta 9 has been working on for several months. Our partners at Auxly are leaders in the global cannabis industry, and among the most knowledgeable and influential companies in the space. We feel the partnership will be of great benefit to Delta 9, to Auxly, and to the subsidiaries that Auxly owns.”
At this time, carrying a capital value in the market of $496.79M, CBWTF has a significant war chest ($214M) of cash on the books, which stands against about $5.3M in total current liabilities. The company has pulled in about $1.8 million in trailing twelve month revenues. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $CBWTF 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 $CBWTF, either long or short, and we have not been compensated for this article.