As we head rapidly toward the instantiation of the adult-use market, Auxly Cannabis Group Inc (OTCMKTS:CBWTF) shares have started to pick up steam. The action in the stock stalled out at key resistance around the 200-day simple moving average last week. But the company continues to show signs of building out its pipeline of strategic investments to push out effective capacity as the marketplace comes online.
For example, the company just announced the closing of an additional investment by Auxly to partially fund the completion of Lotus’ 22,500 square foot Facility in Armstrong, British Columbia. According to the release, “Lotus is a late stage applicant pursuant to the Access to Cannabis for Medical Purposes Regulations and anticipates completing the construction of the Facility by the end of September 2018.”
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 just announced the closing of an additional investment to help fund the completion of Lotus’ 22,500 square foot facility. That sent shares ripping back higher to close out last week.
In all, we’ve witnessed 75% tacked on to share pricing for the stock in the past month, but this action is running counter to the larger trend in the name. In addition, the stock has registered increased average transaction volume recently, with the past month seeing a bit less than 130% beyond what we have been seeing over the larger time frame.
Hugo Alves, President of Auxly commented: “Lotus is a partner that we value deeply, having been part of the original cohort of streaming partners at the inception of Auxly. We are incredibly pleased to be making this subsequent investment into Lotus to complete the buildout of the first phase of their current facility in Armstrong, British Columbia. We continue to look forward to working closely with Lotus’ team to design and build out additional phases of this asset.”
Dale McClanaghan, President and Chief Executive Officer of Lotus commented: “Auxly is emerging as a large player in the distribution and marketing of cannabis in Canada. Lotus Ventures benefits in several ways from the Auxly streaming relationship, in addition to access to equity, the relationship provides us with assured offtake of at least half of our production as well as access to their market and industry expertise. This will enable Lotus to grow more rapidly than it otherwise would while working towards establishing a reputation as a top-tier Licensed Producer.”
Currently trading at a market capitalization of $588.15M, CBWTF has a significant war chest ($295.8M) of cash on the books, which compares with virtually no total current liabilities. The company is pre-revenue at this point. This may be a very interesting story and we will look forward to updating it again soon. 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.