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Aurora Cannabis Inc (CVE: ACB) (OTCMKTS: ACBFF) Making All The Right Moves

Aurora Cannabis Inc (CVE: ACB) (OTCMKTS: ACBFF) Making All The Right Moves
Written by
Alex Carlson
Published on
March 21, 2017
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Aurora Cannabis Inc (CVE: ACB) (OTCMKTS: ACBFF) has attracted a fair mix of skeptics towards management. Some of the comments we've read said that they didn't think management knew what it was doing. We, here at Insider Financial, do not agree with those opinions. Matter of fact, we think management is making some very smart moves that will make Aurora a top cannabis player or a top acquisition target. Taking a closer look at Aurora's moves, there's a lot to like.First up, a little background on the company for our readers taking their first look at an exposure. Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR). The Company operates a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta, and is currently constructing a second 800,000 square foot, highly automated production facility at the Edmonton International Airport.Aurora Sky, the new hybrid greenhouse facility, with a footprint larger than 16 football fields, is expected, on completion, to be the largest, most advanced and most automated cannabis production facility in the world. Situated on 30 acres of leased land in Leduc County, Alberta, management anticipates Aurora Sky to be capable of producing in excess of 100,000 kilograms of high quality, low cost cannabis per year. The location of the new facility provides unrivaled access to transportation, industrial infrastructure, power, water, gas, and courier services.Aurora Sky will feature a closed-system, hybrid greenhouse concept of Dutch design for the expansion. This system will give Aurora's cultivation specialists precision control over all critical environmental variables to ensure production quality is consistent with the Aurora Standard. The high level of automation at Aurora Sky, management believes, will provide for ultra-low per-gram cost of production. In addition, the modular nature of the design will allow for a rapid construction process, minimizing the risk of potential delays, with completion of the new facility targeted for October of 2017. Construction of the facility's pre-engineered structure has been underway in the Netherlands.Earlier this month, Aurora won approval to acquire Peloton Pharmaceuticals Inc., a late-stage ACMPR-applicant, out of bankruptcy protection for C$7 million in cash and common shares. Peloton is constructing a 40,000 square foot cannabis production facility in Pointe Claire, Quebec, which received a “ready to build” letter from Health Canada in 2014. The Company estimates that construction of the Peloton facility is 80% complete, and expects to be ready for Health Canada inspection pursuant to a License to Produce by the summer of 2017.Aurora is buying Peloton with funds from its recently closed C$75 million bought deal private placement. Aurora issued 33,333,357 Units pursuant to the Offering at a price of $2.25 per Unit. Each Unit is comprised of one common share of the Company and half of one Common Share purchase warrant. Each Warrant is exercisable to acquire one Common Share for a period of two years following the date hereof at an exercise price of $3.00 per Warrant Share.After the Organigram and Mettrum recalls, a major issue is cannabis testing protocols. Here, Aurora is looking to get a leg up on its competitors. Aurora has introduced the cannabis industry's most comprehensive product testing disclosure process. The Company has completed the first step in a two-step process that will provide Aurora clients and the general public with access to a simplified Certificate of Analysis (CoA) for every cannabis product available for sale on the Company's menu. The purpose of the new protocol is to provide clients with secure knowledge that every Aurora product available for purchase has been certified by an independent third-party laboratory as having passed testing for the widest possible range of potential contaminants.The new system, developed in partnership with Anandia Labs Inc., Canada's foremost cannabis genetics and testing laboratory, will provide a certification link for each product featured on Aurora's menu, both through the Company's website and through its one-of-a-kind mobile application. Clicking the link will take clients to a product-specific webpage, providing a simplified CoA indicating that the product in question has been analyzed with high accuracy for potency, and passed Anandia's rigorous testing procedures for the presence of contaminants. These important enhancements will be implemented in two steps. The first step, now complete, added these certifications to the Company's website www.auroramj.com. The second step, to be completed soon, will update Aurora's online shop to place a certification link beside the image of each product for sale. CEO Terry Booth said:

"This initiative further extends Aurora's best-in-class Quality Assurance and testing protocols, and gives our clients additional certainty regarding the purity and safety of the cannabis we produce and sell. From the founding of our Company, we have established and emphasized a strict culture of regulatory compliance. We have never used pesticides in our production, yet we have always tested all the products we sell for the presence of pesticides and other potential contaminants. It is imperative that patients have confidence in the safety of the products they consume, and in the integrity of the medical cannabis system. We believe our testing disclosure process will raise the bar for the entire sector, and offer a model for other companies to follow."

Currently trading with a market cap of US$416 million, Aurora's share price is trading at a fraction of Canopy's. This creates an opportunity for a higher reward when Canadian cannabis stocks get hot again. We believe that will come sooner rather than later, especially once we have a clearer picture on when recreational marijuana legalization is going to happen. Expectations are for sometime this spring, but it wouldn't surprise us to see it happen late summer or early fall. Overall, we expect 2017 to be a big year for Aurora Cannabis and the Canadian cannabis sector in general.We will be updating our subscribers as soon as we know more. For the latest updates on ACB/ACBFF, sign up below!Disclosure: We have no position in ACB/ACBFF and have not been compensated for this article.

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