This past trading week (November 20 – 24) saw a rush of announcements from Aurora Cannabis’ business development, including new deals and the terms of its latest proposed takeover bid. The Canadian Health Minister shared an update on the proposed regulations the country will set in place for next year once cannabis becomes legal recreationally. The TMX issued an update in its regulatory search for the standing of cannabis companies with business in the US. Market news completes the cannabis weekly round-up.
The Investing News Network (INN) reported on Canadian Health Minister Ginette Petitpas Taylor offered a new look at the proposed legislation to cannabis the federal government intends to follow, leading up to the full legalization of cannabis next year.
Petitpas Taylor reassured the proposed legalization date of July 1, 2018, won’t be changed, since in the case a province doesn’t have its cannabis plan ready to go, consumers in the area will be able to purchase a variety of products through online sales. The minister also confirmed Health Canada will not be issuing a limit on the number of licenses it gives out once legalization goes through. In fact, she encouraged “micro-producers” to apply and join the market.
The TMX group offered an update on its current investigation of the clearance for cannabis companies and their activities in the US. For the time being there is no Canadian Securities Administrators (CSA) ban in place.
“CDS continues to work with the CSA and exchanges to arrive at a solution that will clarify this matter for issuers, investors, participants and the public. This solution will be founded on each exchange’s role in applying listing requirements, including exchange rules related to issuers’ compliance with applicable laws,” the TMX said.

Greenhouse consultant gets acquired, new terms on previous deals are set to be placed by the new parent company

Larssen is a consulting company on the design and construction oversight for greenhouse cultivation facilities. Their business has found itself in high demand by the growth of cannabis operations across Canada with multiple marijuana producers. On Thursday (Nov. 23), Aurora Cannabis (TSX:ACB; OTCQX:ACBFF) acquired the firm outright.
“The acquisition of Larssen is an immediately accretive, high-margin revenue generating opportunity that also extends our technological leadership in the cannabis sector,” Terry Booth, CEO of Aurora said in a statement.
Since other growers, including five Licensed Producers (LPs), are in the process of using Larssen’s services, Aurora explained it will re-evaluate the deals.
“Any Canadian project deemed not to be in the best interest of Aurora shareholders will be notified that ALPS [Aurora Larssen Projects Ltd.] will no longer participate in such project. We expect this process to take no longer than 3 weeks,” the company said.
won’t shut down the consulting options with these other producers, but it will make new demands from a deal-making perspective. This could mean,
Aurora’s executive vice president, Cam Battley told BNN the company is exploring the possibility of enforcing deal-making with other cannabis growers for the Larssen services. These deals could be partnerships, equity stakes or supply agreements.
“[W]e want to help those companies proceed but what we will require is some level of partnership. If they want to continue to work with Larssen, we’re going to require some level of partnership,” Battley said.
Canopy Growth issued their response to this news and said the company now plans to compete with Larssen in supporting the companies whose deals with the greenhouse designer may be scrapped. “Canopy will offer assistance to any of the impacted cannabis companies so that the sector can continue to grow to meet the needs of Canadians,” the company said in a statement.

Aurora growing impatient with CanniMed bid

Last week Aurora announced it’s takeover intentions to CanniMed Therapeutics (TSX:CMED) with an invitation to respond to the terms by the end of the week. CanniMed failed to do so and now Aurora is proceeding with its all-stock proposal to buy the company. However, Aurora has given CanniMed an ultimatum, don’t complete the transaction for Newstrike (TSXV:HIP), a cannabis company working on the development of brands that will get recognition from customers.
On Friday (Nov. 24) Aurora released a statement signaling its decision to go ahead with its takeover bid, set indicating special conditions CanniMed must follow in order for this deal to go through. Aurora has argued the largest shareholders of CanniMed support the takeover offer and they want to officialize the deal.

The price being offered by Aurora for each CanniMed Share, which would currently be equivalent to the Cap Price (as such term is defined below) of $24.00 payable in Aurora Shares given Aurora’s closing share price of $6.42 on November 22, 2017, represents a compelling premium of 56.9% over the closing price of CanniMed Shares on November 14, 2017(the last day prior to the public disclosure of Aurora’s intention to pursue a combination with CanniMed), and a 74.7% premium over the volume weighted average price (“VWAP”) for CanniMed Shares for the last 20 trading days ended November 14, 2017.

Earlier in the week (Nov. 22) CanniMed announced the creation of a committee designated to review the proposed acquisition from CanniMed. On Thursday Aurora’s executive vice president, Cam Battley told BNN, in the same segment referenced before, CanniMed not responding to their bid was “astonishing.” Aurora indicated in its latest release, its offer will be on the table until March of next year.
CanniMed asked shareholder to not overreact when the bid was originally unveiled since it hadn’t fully evaluated it. Since the proposal by Aurora was made public (Nov. 14), CanniMed’s share price has increased 39.91 percent.

Market News

Emblem Corp. (TSXV:EMC) received an updated review from Echelon Wealth Partners analyst Russell Stanley, in a recent research note. The company maintained it’s “Speculative Buy” rating and its one-year price target of $2.25. Emblem’s share price is currently $1.88, with a market cap of 134.67 million. Over the past five trading days, the company saw 16.77 percent rise to its stock.
“We last revised our 12-month target price in late August… at that time, the adjusted average EV/C2019E EBITDA multiple for the peer group was approximately 7.0x. The peer group multiple has since climbed 80% to 12.6x. On that basis, we are increasing the multiple we use to value EMC from 8.5x to 12x, based on our EBITDA estimate for 2019 (EMC has a December 31 FYE),” Stanley wrote according to a report from Cantech Letter.
WeedMD (TSXV:WMD) saw a substantial 69.57 percent to its stock this past trading week thanks to its purchase announcement for new facility space from Perfect Pick Farms in Strathroy, Ontario. This acquisition, according to the company, will increase their annual production to over 21,000 kilograms, thanks to the new 14 acres worth of state-of-the-art greenhouse facilities from Perfect Pick Farms.
WeedMD’s lease agreement for initial 217,800 square feet facility will last for two years, although the company also has an option to extended the term for an additional 10 years.
“Perfect Pick is a family-run business that will provide a large portion of the skilled labor required to operate the facility,” WeedMD said.
The Canadian marijuana ETF enjoyed a substantial growth in its value this past trading week. Over the five-day trading period, the Marijuana Life Sciences Index ETF (TSX:HMMJ) saw an 8.72 percent increase. As of 1:47 p.m. EST on Friday, the ETF traded at $13.84. Since its inception earlier this year, the index has gone up 35.02 percent.
Don’t forget to follow us @INN_LifeScience and @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: WeedMD is a client of the Investing News Network. This article is not paid-for content.

** This article is updated each week. Please scroll to the top for the most recent information**

Cannabis Weekly Round-Up: Quebec Reveals Marijuana Bill

Nov. 17 – By Bryan Mc Govern
This past trading week (November 13 – 17) saw the official marijuana bill from Quebec and a new development in the Aphria against TMX Group situation. Market news completes this week’s cannabis weekly round-up.
The province of Quebec officially tabled its cannabis legislation on Thursday (November 16), the plan outlined its regulations for marijuana as it becomes fully legal in Canada next year. Highlights of the bill include:

  • Legal possession age will be 18 for cannabis
  • Personal use growth of cannabis will be illegal
  • Zero tolerance for consumption and driving. “The message we want to send is: if you consume cannabis, don’t drive,” said Transport Minister André Fortin.
  • If smoked, cannabis must be consumed in the same locations as tobacco
  • “It is prohibited for an adult to possess, in a place other than a public place, more than 150 grams of dried cannabis,” a CBC report indicated.

The Société Québécoise du Cannabis (SQC) will open 15 stores dedicated to cannabis products. A report indicated experts suggested a price of $7 to $10 per gram of cannabis.
Aphria (TSX:APH; OTCQB:APHQF) has faced uncertainty against the Toronto Stock Exchange regarding its business in the US. The TMX Group, which is in charge of the TSX and the TSXV has indicated its reservations regarding cannabis companies pursuing opportunities in a market that has not fully legalized cannabis. Technically in the US, on a federal level cannabis is illegal, some states have legalized it already. A new report from the Globe and Mail said the TMX might end up asking Aphria to choose between its listing on the TSX and giving up its assets in the States.
“We don’t know where this dialogue is heading,” Aphria’s CEO Vic Neufeld said. “There is no urgency from them.” Aphria has been facing this situation since the TMX first expressed its potential evaluation and even challenges to stocks with US interests. Aphria holds a substantial stake in Liberty Health Sciences (CSE:LHS; OTCBB:LHSIF) a company investing in cannabis opportunities in the state of Florida. Aphria also holds stake in the Arizona-based company Copperstate Farms.

Market News

Aurora Cannabis (TSX:ACB) announced this past week a new offering deal with Canaccord Genuity worth approximately up to $100 million. Terry Booth, CEO of Aurora, said this new capital will “accelerate” their expansion plans both in Canada and internationally.
“Upon closing of this Offering, and with the anticipated gross proceeds on conversion of our recently accelerated warrants, Aurora’s pro-forma cash position will exceed an unprecedented $340 million,” Booth said in a statement.
National Access Cannabis (TSXV:NAC) announced it expanded into the province of Alberta, with a new care clinic in Edmonton’s Old Strathcona District. The clinic is space designated for giving consultation to patients inquiring about cannabinoid therapy.
“NAC is committed to delivering secure, safe, and responsible access to legal cannabis and we’re pleased to expand our trusted clinic model to the residents of Edmonton,” Mark Goliger, CEO of National Access Cannabis said.
In a move that caused an uproar for CanniMed Therapeutics’ (TSX:CMED) stock, Aurora Cannabis has placed takeover offer in what would represent one of the biggest cannabis deals in Canada. The offer, according to the Financial Post, represents an all-stock acquisition for $582 million, meaning $24 per share. CanniMed told shareholders to wait for the company to review this deal thoroughly.
“We advise shareholders to take no action until such time as the board has had the opportunity to fully consider and make a recommendation regarding the unsolicited offer,” the company said. Over the past five trading days, CanniMed’s stock increased 40 percent.
Vahan Ajamian, a cannabis analyst with Beacon Securities, told the Canadian Press if this deal goes through it could spark merger and acquisition deals all over the industry.
The Canadian marijuana ETF enjoyed a substantial growth to its value this past trading week. Over the five-day trading period, the Marijuana Life Sciences Index ETF (TSX:HMMJ) saw a 7.89 percent increase. As of 1:10 p.m. EST on Friday, the ETF traded at $12.85. Since its inception earlier this year, the index has gone up 25.46 percent.
Don’t forget to follow us @INN_LifeScience and @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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