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It’s the top producer in Canada with its production output of 570,000 kilograms per year.
It also has about C$700 million in investments in the cannabis industry outside of its own business putting this pot stock in a league of its own and making it the Berkshire Hathaway of the cannabis sector.
Aurora Cannabis (OTC: ACBFF; TSX: ACB.TO) reported a 223% jump in sales over a year ago in its fiscal fourth quarter. But Aurora’s profit gains are thanks in large part to its investments in other cannabis companies.
Monday evening, the company reported earnings of C$79.9 million, compared to losses of C$4.8 million in the same period a year earlier.
“The increase was primarily attributable to the unrealized non-cash gain on derivatives and marketable securities,” Aurora said, pointing to the rise in value of its investments as the source of its increase in profit.
One example of the producer’s investments in the sector is its stake in The Green Organic Dutchman (NASDAQ: TGODF), which is expected to produce 195,000 kilograms per year after announcing three new capacity expansions in June – making it one of the top four producers in Canada ahead of legalization going into effect in October.
In January, Aurora Cannabis announced that it had invested C$55 million in TGODF, giving it 33 million shares at C$1.65 per share. As of Monday, TGODF was sitting at C$8.25, valuing Aurora’s stake in the company at C$270 million. Aurora owns roughly 17% of TGODF and has the option to increase its stake to more than 50%.
Aurora has also taken positions in Hempco Food and Fiber Inc. (OTC: HMPPF; TSX: HEMP) which is up nearly 200% in the last twelve months, CTT Pharmaceuticals (OTC: CTTH) which is up 662% year to date, and Choom Holdings (OTC: CHOOF) – up just over 100% this year. It also owns around 20% of Capcium Inc., a private company that is providing equipment to Aurora Cannabis for its manufacturing of softgel pills for the medical marijuana market.
These investments are already paying off and could prove to be very valuable partnerships in Canada’s soon-to-be recreational marijuana market. Aurora’s Chief Corporate Officer Cameron Battley said in a conference call on Tuesday that the company’s investment in private liquor store chain, Alcanna, will include the creation of “a chain of Aurora-branded cannabis retail stores” in Alberta.
“Beyond simple fee-to-sale, Aurora has established a deep presence in every aspect of the cannabis industry value chain,” Battley said on the call. “This includes plant genetics and industry leading research, facility design, extraction and formulation right through the consumer engagement and point-of-sale.”
Aurora isn’t just investing in other cannabis companies, it’s also buying them. The company has grown through at least 14 acquisitions in the last two years as it seeks to build itself into a “preeminent global cannabis company.”
Among these was Aurora’s acquisition of MedReleaf for $2.5 billion in May. Buying the Ontario-based MedReleaf increased the company’s production capacity by 140,000 kilograms annually. In addition to MedReleaf, Aurora has also purchased ICC Labs Inc, Hothouse Consulting Inc, Anandia Laboratories Inc., Agropro UAB, and Borela UAB so far this year.
The company also recently inked a deal with Alfred Pedersen & Son in Denmark, a partnership that will see the retrofitting of a 1 million square foot facility for growing marijuana. When the facility is up and running, it will produce 120,000 kilograms per year in Denmark.
Given its investments, acquisition strategy, and burgeoning international presence, Aurora Cannabis looks poised to succeed in Canada’s new recreational market and beyond.
Aurora Cannabis is up nearly 300% in the last year, and is up 27% in the last month. Watch for the stock to soon be listed on a major U.S. exchange, which the company confirmed it has plans to do in the near future though executives did not say which exchange they plan to list on.