Shares of Auxly Cannabis Group Inc (OTCMKTS:CBWTF) have pulled back to a zone of support just under the 50-day simple moving average to the $0.75 level. The stock’s underperformance is likely due to strategic inactivity for the company over the past 6 months.
However, the company just announced that it has entered into a binding interim agreement with Atlantic Cultivation Inc., an applicant under the Access to Cannabis for Medical Purposes Regulations pursuant to which the parties will collaborate on the development of a 110,000 square foot indoor cultivation facility in St. John’s, Newfoundland and Labrador and on the development of retail locations in the province. This is major step in the right direction and could represent an opportunity in the stock once the sell-the-news market pressure in the cannabis space subsides following the Canadian legalization announcement.
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, CBWTF just announced that it has entered into a binding interim agreement with Atlantic Cultivation Inc., an applicant under the Access to Cannabis for Medical Purposes Regulations pursuant to which the parties will collaborate on the development of a 110,000 square foot indoor cultivation facility in St. John’s, Newfoundland and Labrador and on the development of retail locations in the province. In all, recent action has seen nearly -10% stripped out of shares for shareholders of the name during the trailing month.
Hugo Alves, President and Director of Auxly commented: “We are excited to have entered into this partnership with Atlantic Cultivation, a company led by an excellent management team with deep roots in Newfoundland and Labrador. This strategic partnership adds significant depth to our operations in Atlantic Canada. This partnership with Atlantic, coupled with our premium craft producer Robinson’s Cannabis in Nova Scotia and our world-class innovation and extraction hub at Dosecann in PEI demonstrates Auxly’s commitment to Atlantic Canada where we are building meaningful cannabis businesses that have a positive impact on the region.”
Furthermore, the listing has seen a growing influx of trading interest, with the stock’s recent average trading volume running 56% above the average volume levels in play in this stock over the longer term.
Now commanding a market cap of $441.4M, 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 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.