Aura Health (CSE:BUZZ) CEO Daniel Cohen believes his company’s progress overseas has greatly positioned it to serve both the Israeli and European markets.

The company recently signed a supply agreement with FSD Pharma (CSE:HUGE) that will see the two companies enter into a consulting agreement together. Aura is expected to help assist FSD Pharma with obtaining its euGMP certification.

According to Cohen, Aura expects to finalize the acquisition of Pharmadrug this week, which will allow the company to import cannabis into Germany and serve local markets. The company intends to secure future agreements with cannabis providers in both Israel and Canada in order to further serve the growing German cannabis market.

Below is a transcript of our interview with Aura Health CEO Daniel Cohen. It has been edited for clarity and brevity.

Investing News Network: What differentiates Aura Health from other cannabis companies?

Dan Cohen CEO Aura Health: Aura has a unique business plan versus the majority of the other cannabis companies in that we are focused on the Israeli and European markets. Although a lot of the large ones, the Aphrias (TSX:APHA,NYSE:APHA), the Canopies (TSX:WEED,NYSE:CGC), the Auroras (TSX:ACB,NYSE:ACB), have entered into the European market and Cronos Group (TSX:CRON,NASDAQ:CRON) has entered into the Israeli market, there are no public companies that are focused on Israel in terms of cultivation, and there are no micro-cap companies that I know of right now that are focused on the European market, so I think that really differentiates us.

We believe that Europe is going to be the largest market. There are 508 million people in the European Union. Even if the US went federally legal, that market is not as large as the European market itself in terms of size. We think it’s going to be the largest market and it’s only been in existence for a couple of years so it’s basically, in terms of penetration, where Canada was at six or seven years ago.

INN: Why should Aura Health appeal to investors?

DC: I think Aura Health is extremely enticing for investors because of the fact that the valuation is extremely low given the upsides. It is probably one of the lowest market caps in the cannabis space right now. As of the end of next week, we will have closed on the German distribution company, which means that we will not just be a concept, we will actually have operations, and we will be selling cannabis in the German markets. Not only do we have one of the lowest valuations overall, but we also have a presence in the market where there’s arguably the largest upside. So, there’s a lot of upside to investing in Aura.

INN: What catalysts do you anticipate coming up for Aura moving forward?

DC: Several catalysts. Firstly, we are looking to close the acquisition late next week and that will get us into the German market. Secondly, we will be looking to sign supply agreements. The first one will be with FSD Pharma, which has been announced, but we actually have to finalize that supply agreement, and we’ll be looking to secure more supply from Canada and from Israel.

Those are major catalysts that show how we can bring product into Germany. Germany right now is in deficiency and needs product, so I think that’s a major catalyst. Other catalysts are moving the Israeli business forward. We’re looking to break ground in Israel to build our cultivation in the next couple of months; I think that’s a great catalyst. Thirdly, we are going to be looking to build a dispensary chain in Israel and I think that’s a major catalyst as well.

INN: Speaking of Israel, what makes Israel’s cannabis industry so unique?

DC: It’s unique from several standpoints. Firstly, Israel is the first country where modern medical cannabis began. Israel is a leader in medical cannabis research and development (R&D). Firstly, it was an Israeli scientist who discovered THC, who isolated THC. It was another Israeli scientist who discovered the anti-inflammatory properties of CBD. Also, on a commercial front, Israel is one of the first countries to have medical cannabis, and they developed some of the earliest successful strains.

As an example, one of the first major companies for medical cannabis in Israel was called Tikun Olam. When MedReleaf started, they went to Israel and licensed the Tikun Olam strains, and those are the strains that took MedReleaf to the point where it was purchased by Aurora. Israel doesn’t just have a history of R&D, it has continued R&D and it has a proven track record of producing commercial products.

The other thing that’s going to make Israel extremely interesting is that they just passed the export law, so Israel is now going to become an exporter of medical cannabis. The framework is being put into place and what makes Israel unique as a medical cannabis exporter versus other countries that are looking to do so is that Israel is a good manufacturing practices jurisdiction, meaning that it’s got some of the highest-quality agricultural technology and is a country that has a lot of pharmaceuticals and pharmaceutical exports. So for markets that are going to be looking for pharmaceutical-grade cannabis, Israel is going to be perfectly positioned for that.

INN: So how does Aura Health plan to serve European markets?

DC: We will be closing on our acquisition late next week, which will give us the ability to not only distribute into the German market, but to import cannabis into the German market. The company we’re buying has a relationship with Bedrocan out of Holland, and most of the cannabis that is sold in Germany right now gets purchased from Bedrocan. We think we’ll be in the unique position to be able to access medical cannabis from both Canada and from Israel. We’re going to have supply agreements from Canada and we are very confident we’ll be able to sign some supply agreements from Israel. We will be building a grow in Israel that will aim to export that cannabis to Germany.


This interview is sponsored by Aura Health (CSE:BUZZ). This interview provides information which was sourced by the Investing News Network (INN) and approved by Aura Health in order to help investors learn more about the company. Aura Health is a client of INN. The company’s campaign fees pay for INN to create and update this interview.

INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Aura Health and seek advice from a qualified investment advisor.

This interview may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, receipt of property titles, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The issuer relies upon litigation protection for forward-looking statements. Investing in companies comes with uncertainties as market values can fluctuate.

Cannabis Market Update: Q3 2020 in Review

Click here to read the previous cannabis update.

During the first few months of investment time in 2021, cannabis faced some volatility alongside optimism about federal changes in the most important market for the drug.

The cannabis business found its stride during Q1 thanks to policy change signals and consolidation.

To find out more, the Investing News Network (INN) asked experts about progress in the market during the first major period of the new year, and which developments investors should watch out for.

 

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Cannabis market update: New York and US potential boost operations

New York state’s legalization of recreational cannabis was a huge Q1 announcement that added pressure to the federal government when it comes to cannabis policy, said George Mancheril, co-founder and CEO of Bespoke Financial, a debt financing business with a particular focus on servicing cannabis businesses.

“It’s going to add to the chorus of voices in the federal scene to basically move sooner rather than later,” he explained to INN.

Following the US election in 2020, the momentum for cannabis businesses went on the upswing, as did company valuations, with the idea of expansion at the heart of it all, according to Mancheril.

Before starting Bespoke Financial, Mancheril learned from traditional investment banks, where he worked on lending, fixed income and debt markets with Goldman Sachs (NYSE:GS) and Guggenheim Partners.

Nawan Butt, portfolio manager with Purpose Investments, agrees with Mancheril. The financial expert told INN the ongoing legalization process seen in the US market is leading to expansion.

“It’s becoming more of a national move, then small pockets of proliferation. That’s very exciting about cannabis right now,” said Butt, who co-manages the Purpose Marijuana Opportunities Fund (NEO:MJJ).

This proliferation effect is causing a change in valuations and enthusiasm for US-based operations. Mancheril told INN that by the end of Q1, multi-state operators (MSOs) had raised approximately US$3.3 billion.

The cannabis lender said he sees the industry as having grown from the woes of 2019; it is now seeing a return to form by way of the excitement for an ongoing opening process in the US.

The expert explained that there is likely to be a windfall of capital in the wake of major federal changes for cannabis policy, although the timeline for these changes is becoming increasingly hard to predict.

Leading up to that capital influx, Mancheril said he wants to see operators really drill down on the value of desired assets and whether they make sense.

 

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“What I’d hope is that we continue to see bullish sentiment, but with some measure of responsibility, and let’s not just get over ahead of ourselves,” Mancheril told INN. “The idea is let’s minimize the volatility and continue growing responsibly.”

As far as struggles go, Butt explained that the cannabis industry has cemented itself as a growth-type sector, and as such there are macro environment pressures affecting the way these assets operate.

“We’ve seen this preference for cash flows at growth in the current or in the near future, rather than in the far future, and that’s what we’re seeing as far as valuations go in the broad market,” Butt said.

Cannabis market update: Volatility continues to rule as industry foundations build

Despite the industry’s current potential and the growing pains it has gone through as a whole in both the US and Canada, volatility remains a key factor in the cannabis investment scene.

Butt explained that the current shareholder base, which is dominated by hedge funds and retail investors, still lacks enough institutional support to avoid the day-to-day volatility cannabis has come to be known for.

These two investor groups, Butt said, can be easily spooked and excited by the news of the day when it comes to their investments.

“A lot of these institutions’ strategies are not about short-term profits, but they’re about long-term sustainability of the businesses themselves,” Butt said.

“That’s why you see a lot of volatility in the space, and that’s essentially what we’ve seen over the past, I’d say, three to two months as well,” he added.

That means investors shouldn’t expect an end to volatility anytime soon.

“It’s not about whether we continue to expect volatility, because we do,” Butt said. “We really think that the volatility will be taken out when the shareholder base becomes more institutional, but it’s really about understanding why there is volatility in the first place.”

Cannabis market update: Canadians talk up US business potential, but questions remain

A surge of mergers and acquisitions has taken over the Canadian cannabis sector recently as more producers see potential in America.

One of the biggest announcements in this regard came when Organigram Holdings (NASDAQ:OGI,TSX:OGI) secured a C$221 million investment deal from British American Tobacco (NYSE:BTI,LSE:BATS).

Using the funds, the two will work in tandem to develop new branded products designed to work on the international stage, including in the US. Organigram CEO Greg Engel previously told INN that the US represents a critical opportunity for Canadian companies, but the entry point isn’t as clean as it could be at the moment.

 

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While the long-term potential may be exciting for investors, Butt told INN he’s still unsure how the approach will work for Canadian companies.

The Purpose Investments expert said there will be plenty of space for the biggest Canadian names to pursue US market entries, beyond the initial hemp-derived CBD moves some operators have mde, since the US represents the biggest market in the world.

“But there’s just way too many unknowns right now to say exactly what that participation is going to look like, or when that participation will happen,” he said.

“What we do know is that currently the US MSOs are in a wonderful sort of position to expand on their market leadership that they have. And it will be tough for Canadians to come in and compete with them,” Butt said.

Canadian players still retain the upper hand at times in terms of valuation, which is confusing for both Butt and Dan Ahrens, chief operating officer and portfolio manager at AdvisorShares.

“The performance in quarterly earnings of US companies has been rather spectacular. They’ve knocked it out of the park in most instances,” Ahrens told INN.

Butt praised the recent performance reports from MSOs across the board, pointing to year-over-year growth lines and projections for continued positive performance.

In his view, share prices still don’t reflect company value. “Those are really being discounted at this point,” Butt told INN.

“We’ve seen the Canadian licensed producers be really hot stock performance-wise, outpacing the US (MSOs), and I’ll say it’s rather nonsensical to me,” said Ahrens, who oversees the AdvisorShares Pure Cannabis ETF (ARCA:YOLO) and the recently launched AdvisorShares Pure US Cannabis ETF (ARCA:MSOS).

Cannabis market update: Investor takeaway

The cannabis investment proposition finds itself at an interesting moment in time, as the entire sector eagerly awaits confirmation in the US at the federal level.

While for the Canadians waiting on the sidelines, this development may feel like a major necessity to address current financial struggles, for US-based operators, the heat around the corner could represent an increase to their already thriving operations.

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