Why we Remain Bullish on Auxly Cannabis Group Inc (OTCMKTS:CBWTF)

Why we Remain Bullish on Auxly Cannabis Group Inc (OTCMKTS:CBWTF)

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In our recent analysis, we have noted the seeming key bottom that came into place for share of Auxly Cannabis Group Inc (OTCMKTS:CBWTF). That thesis continues to hold up under recent action and scrutiny, with the stock holding its ground during its consolidative phase that has been underway for the past month. The company has been lining up catalysts to support that view as well, including its recent announcement that it has entered into a hemp cultivation and purchase agreement pursuant to which the company has agreed to act as the financial sponsor for the development of a hemp farming co-operative consisting of six individual hemp license holders pursuant to the Cannabis Act located in Prince Edward Island.

According to the release, “To date, the Company has funded $4.5 million of the approximately $6 million it will advance and the Hemp Farmers have planted nearly 300 acres of hemp, which is expected to result in approximately 100,000 kilograms of hemp biomass. Pursuant to the Agreement, Auxly’s wholly-owned subsidiary, Dosecann Inc., is entitled to purchase all of the hemp cultivated by the Hemp Farmers in 2019 at a preferential price relative to current wholesale market rates; the funds advanced by Auxly toward the development of the project will act as pre-payment for any future hemp purchases by Dosecann. The Company expects the initial hemp harvesting to commence later this fall, at which point the hemp will be tested, milled and stored pursuant to Dosecann specifications prior to delivery to Dosecann for extraction and manufacturing into final finished products.”

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 hemp cultivation and purchase agreement pursuant to which the Company has agreed to act as the fiscal sponsor for the development of a hemp farming co-operative consisting of six individual hemp license holders pursuant to the Cannabis Act located in Prince Edward Island.

Recent action has seen 3% added to share values of the name over the past week of action. What’s more, the company has witnessed a pop in interest, as transaction volume levels have recently pushed 44% over what the stock has registered over the longer term.

“We are very excited to partner with experienced farmers in the province of PEI,” said Hugo Alves, President of Auxly. “I’m proud of our Dosecann team for finding this opportunity and being able to demonstrate our continued support for Atlantic Canada. This project ensures our ability to meet the growing market demand for wellness and adult-use cannabidiol (CBD)-based products, and enhances our commitment to bringing innovative, branded derivative cannabis products to Canadian consumers.”

Earning a current market cap value of $413M, CBWTF has a significant war chest ($119.5M) of cash on the books, which is balanced by about $122.4M in total current liabilities. One should also note that debt has been growing over recent quarters. CBWTF is pulling in trailing 12-month revenues of $4.7M. In addition, the company is seeing recent top-line growth, with sequential quarterly revenues growing at 238.1%. 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 $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.

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