When the US Cannabis Market Booms, Aurora Will Be Ready – LPC
The Motley Fool outlines a plan for Aurora Cannabis to legally enter the US cannabis market now so that it’s ready if – or more likely when – the US legalizes cannabis. (Please see link to full article below.) “In fact, the company already has a backdoor strategy for entering the US market,” the report states. That strategy has “flown under the radar for many investors.”
Foreign companies can’t operate within the US cannabis market when cannabis is still illegal at the federal level. This is for several reasons. For one, it would jeopardize its stock market listings on the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSX).
However, it has found a loophole. One of Aurora’s subsidiaries, Australis Capital, recently listed on the Canadian Stock Exchange (CSE). During the spin-off, Aurora lost all its ownership rights and Australis Capital headquartered in Las Vegas. It does have warrants though that it can exercise which would bring its ownership back to 40% in the future. In other words, it can buy a stake in the US cannabis market when cannabis is legalized there.
“In the meantime, Australis Capital has been busy investing in U.S. cannabis businesses.” Australis has bought into several US cannabis companies: Wagner Dimas, Body and Mind, and Mr. Natural Productions. It has also invested in a US-based hemp company, Folium Biosciences.
It is possible that Canadian companies won’t have to wait until official legalization to get into the US cannabis market. If the STATES bill passes, which will essentially allow individual states to control cannabis legalization, Canadian companies may be let in.
Aurora Not the Only Canadian Company with US Interests – LPC
Other companies such as Tilray and Canopy Growth are also finding creative ways to get into the US cannabis market. Tilray recently purchased Manitoba Harvest, a hemp food products company with a stake in the US market. Canopy announced in April 2019 that it has an option to buy Acreage Holdings in the US, if and when cannabis is legalized. It also hired Martha Stewart to develop CBD products and announced plans to build a hemp operation near its US partner, Constellation Brands.
This editorial content from the LPC News Editor is meant to provide analysis, insight, and perspective on current news articles. To read the source article this LPC commentary is based upon, please click on the link below.