Shares of Auxly Cannabis Group Inc (OTCMKTS:CBWTF) have been back in dive mode, with new all-time lows in the making. But a quick reversal back above the $0.50 level could mark a key bottom. So it’s worth watching and acting if that benchmark and pattern signal forms. To help flesh out the story, the company just announced that it has entered into a supply agreement with its strategic partner, Delta 9 Cannabis Inc. in which the Company will supply cannabis products to Delta 9’s multiple retail locations, where permitted.
According to the release, Delta 9 is a vertically integrated cannabis company based in Winnipeg, Manitoba. Delta 9 currently operates four cannabis retail stores in Manitoba, with plans to build out a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9’s stores have become one of the top performing retail platforms in Canada since October 2017, recording over $14 million in retail revenue and over 250,000 customer transactions in the first twelve months of legal cannabis sales.
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 supply agreement with its strategic partner, Delta 9 Cannabis Inc. in which the Company will supply cannabis products to Delta 9’s multiple retail locations, where permitted.
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action CBWTF shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -19% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Furthermore, the listing has seen interest climb, with an increase in recent trading volume of 93% over the long run average.
“We are so pleased to be distributing our branded cannabis products through our strategic partner’s retail stores,” said Hugo Alves, CEO of Auxly. “We are thrilled that consumers will be able to purchase our suite of cannabis products at Delta 9 retail locations including oils, chocolates, chewables and vape products under our Kolab Project, Foray and Dosecann brands. Delta 9 was one of our first strategic partners, and we are so excited to reaffirm our partnership and joint commitment to developing a robust platform for the recreational cannabis market across Canada.”
Earning a current market cap value of $211M, CBWTF has a significant war chest ($186.9M) of cash on the books, which stands against about $154.7M 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 $5.8M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 215.8%. We will update the story again soon as developments 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.