The cannabis sector has been trading mixed as the overall market has moved higher, and many investors are closely monitoring these price movements.
The recent weakness does not concern us as we continue to focus on companies that represent differentiated long-term opportunities. We are focused on companies led by elite management teams and will be targeting these types of companies on this weakness. Today, we highlighted three recent company announcements that we believe investors need to be aware of.
Aurora Cannabis Continues to Make Investments
Aurora Cannabis Inc. (ACB.TO) (ACBFF) came off its highs after announcing that it is increasing its ownership position in Alcanna Inc.’s (CLIQ.TO) (Formerly: Liquor Stores NA). Alcanna intends to use the proceeds to establish and launch a leading brand of cannabis retail outlets, whereby it intends to create, initially, some 50 retail cannabis stores in prime retail locations in western Canada, both through conversion of existing stores and by establishing stores in new locations.
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Aurora has 25% ownership interest in Alcanna (on a non-diluted basis) and has the right to increase its ownership interest to up to 40%. We are favorable on this relationship and if the companies can deliver, this option will prove to be a major benefit to Aurora shareholders.
Over the last year, Aurora has been laser focused on the recreational opportunity, increasing production capacity, and international markets. The marijuana producer has made several investments to improve its position in every marijuana market it enters and represents a long-term opportunity. The shares have been under pressure and have been trending lower. We are not concerned by the recent weakness as long as Aurora can execute on the current plan.
Maricann Bounces Higher and is a Stock to Watch
Maricann Group Inc. (MARI.CN) (MRRCF) surged higher after announcing the completion the acquisition of Haxxon AG. This is a strategic move and provides an asset that is expected to be a focal point of the company’s European expansion strategy as it can easily enter the Swiss market through Haxxon’s production of feminized high CBD cannabis plants. Currently, Haxxon operates within a 64,500 sq. ft. indoor facility in Switzerland.
This acquisition was completed under reasonable terms and we are favorable on this aspect of the deal. Part of the deal is milestone based which is attractive since it provides even more of a reason to deliver. Under the agreement, Maricann purchased Haxxon for $2,580,000 CAD in cash and 3,848,505 common shares.
Maricann broke higher on this news and we are monitoring price movements after this rally. The shares have been under pressure recently and have had trouble holding its gains. The company has faced roadblocks in the Canadian and German marijuana markets, which have put pressure on the shares. We are interested by the Maricann story and will monitor how the company continues to execute.
Terra Tech Margins Improve in the First Quarter
Terra Tech (TRTC) is a stock to watch after the company released first quarter financial results which showed improvement. While we remain cautiously optimistic with Terra Tech, the gross margin improved to approx. 19.1% for the quarter and think this is a metric to keep an eye on. Revenue growth was impressive but not eye popping and we will monitor how these numbers improve over the coming quarters.
Terra Tech is focused on increasing production capacity and said that sales have been ramping up at its Nevada and California dispensaries. We are favorable on these two markets and view Terra Tech as an early mover in these markets. While we are favorable on Terra Tech’s position in two high-growth markets, it all comes down to execution.