Health Canada Gives Aurora a Green Light

Two Aurora Cannabis Inc. facilities got Health Canada approval today.

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Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB.TO) got a boost from Health Canada today, with news that will help the company scale up production.

Two Aurora facilities fully licensed

The Edmonton-based company announced this morning that Health Canada awarded full licensing to its Aurora Sky and MedReleaf Bradford facilities.

Facilities to produce and sell cannabis

The Edmonton and Bradford facilities are now licensed to produce and sell cannabis and its derivative products.

Scaling supply

According to Aurora’s CEO, Terry Booth, the boost to the company’s production capacity will be significant.

“The Sky and Bradford facilities specifically add over 128,000 kg per year in capacity.” That, he says, will result in “significant increases in product availability across our domestic medical and consumer.”

He added that this will add to supply for the international market segments as well in the coming months.

Booth credits Aurora’s production prowess for the company’s success at its Aurora Sky facility.

“Current production at Aurora Sky, with recent harvests exceeding target yields, validates our production philosophy and our investment in high-tech, highly automated facilities.”

He continued, “MedReleaf Bradford employs best practices identified during the integration of the Aurora and MedReleaf organizations, and is consistently delivering exceptional yields and high-quality product [to]… medical and consumer markets.”

Flying friendly skies

Aurora is known for its cost efficiency. The Aurora Sky facility was created to produce high caliber, consistent cannabis at a low cost.

The facility is 800,000 square feet, uses state-of-the-art technology, and focuses on automation. The goal is impressive: less than a buck to produce a gram of weed.

Following this morning’s news, Aurora expects the plant to be entirely seeded by next month.

Rooms to grow

The MedReleaf Bradford facility is equally engineered to impress. At 210,000 square feet, Aurora built the high-tech facility to EU GMP specifications. 17 separately climate-controlled plant rooms house hang-dried, hand-manicured cannabis.

The company predicts early April 2019 to have the facility fully planted. It expects to cultivate 28,000 kg of marijuana annually from the facility.

Is Aurora a buy?

Aurora’s own estimates top 500,000 kg annual production. However, the company is in an excellent position to beat competitors at its peak production.

Consider its organic growth with Aurora Sky and Aurora Sun facilities, its partnership with Aurora Nordic, and its acquisitions like ICC Labs, CanniMed and MedReleaf. Those facilities may push production above estimates, and hearty supply deals could follow.

Nevertheless, investors must also keep in mind that the company’s outstanding shares went from 16 million to 998.5 million recently. While the acquisitions bring the company value, that dilution hurts shareholders.

Meanwhile, Health Canada’s licensing rate, as well as supply chain bottlenecks are still a concern for producers there. On the company’s recent earnings call, Aurora’s Chief Corporate Officer Cam Battley said “we need better retail infrastructure across the country to see the level of sale everyone is anticipating. It will take a couple more quarters.”

Since legalization in Canada, Aurora’s stock has declined almost 35 percent, following on a pre-legalization sector-wide boost for pot stocks. Currently, the stock is trading at $9.46, up $0.32 from yesterday’s close.

Written by Rob McLean

Rob loves staying on top of developments in the cannabis sector, and always has his finger on the pulse of real estate markets.

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