Aurora Cannabis: An Acquisition Story to be Watching
Aurora Cannabis (ACB.TO) (ACB) is one of the leading global cannabis producers and has been focused on creating a business that is levered to all aspects of the industry. When it comes to the Canadian cannabis retail opportunity, Aurora Cannabis has made significant investments in leading operators and is highly levered to this burgeoning market.
It makes sense for Aurora Cannabis to be focused on the Canadian retail opportunity since it is one of the largest cannabis producers in the country. By investing in the cannabis retail market, the company has secured some of the most strategic relationships when it comes to this aspect of the industry and these relationships will ensure that the company’s products have significant shelf space at these retail locations.
The Canadian cannabis producer made an initial splash in the Canadian cannabis retail market by investing in Alcanna Inc. (CLIQ.TO) in 2018. This is proving to be a strategic investment as Alcanna has been able to establish a significant position in the Canadian cannabis retail market. Over the next year, we expect to see Alcanna open additional retail locations and expect Aurora to benefit from this. We will monitor how the relationship continues to evolve and are favorable on this aspect of the story.
Months after announcing the investment in Alcanna, Aurora Cannabis announced an investment in Choom Holdings (CHOO.CN) (CHOOF) which is also focused on the Canadian cannabis retail market. The Canadian cannabis producer ended up increasing the size of its investment in Choom and we are monitoring how this relationship evolves as well.
Based on the historical track record of Aurora when it comes to acquisitions, we would not be surprised to see both these companies acquired and will monitor this aspect of the story on a going-forward basis. Aurora Cannabis is a company that has significant catalyst for growth and we will monitor how the story continues to evolve.
Canopy Growth: Accelerates Strategy Through Acquisition
Canopy Growth Corporation (WEED.TO) (CGC) has been one of the most talked about names in the cannabis industry. The company has recently been making headlines for the wrong reasons and this is an opportunity that we continue to be excited about. Following a weak quarterly earnings report, Bruce Linton was ousted as CEO by Constellation Brands (STZ) and this took the market by surprise.
Although there are a number of questions facing the leading cannabis producer, today we are going to focus on the company’s leverage to the Canadian cannabis retail market. Last year, Canopy Growth accelerated its strategy with the acquisition of Hiku Brands (Tokyo Smoke) for north of $300 million (CAD) and this is an interesting aspect of the story. So far, the acquisition has not paid off like Canopy Growth has expected but we are still in the very early innings as it relates to the Canadian retail market.
The last month has been rough for Canopy Growth and we will monitor how the company continues to execute on the Canadian cannabis industry. Canopy is also leading the push when it comes to the international cannabis opportunity and we are bullish on this aspect of the story. Even if the bet on the Canadian cannabis retail market does not pay off, the company has several major potential catalysts for growth and is an opportunity to be watching.
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AUTHORED BY
Anthony Varrell
Anthony Varrell is Managing Director of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.