Aurora Cannabis Set to Ramp Up its Grow Ops

Aurora Cannabis Inc. (TSX:ACB), one of the Canadian marijuana stocks, said it received licenses for outdoor cultivation at two Canadian sites

SmallCapPower | July 19, 2019: Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB), one of the Canadian cannabis stocks, Monday announced that it has received Health Canada licenses for outdoor cultivation at two Canadian sites. The new sites, to be located in Quebec and British Columbia, will be used for cultivation research to develop new technology, genetics and intellectual property in order to drive sustainable, high-quality outdoor production.

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Aurora Cannabis will conduct research on cultivation techniques to further excel at growing cannabis in varying climate conditions and will examine approaches to environmentally-sustainable cannabis agriculture.

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The Company also confirmed that it has now received the Health Canada processing license for its Aurora Air facility located near the Edmonton International Airport and Aurora Sky. Aurora Air will be home to several of the new production lines for edible products such as gummies and chocolates, to be introduced to the Canadian consumer market in December 2019.

Read: Aurora Cannabis Inc: First Large LP to Reach Profitability?

Aurora Cannabis posted an adjusted EBITDA of ($22.9M), ($35.4M), and ($47M) for Q3/19, Q2/19 and Q1/19, respectively. These numbers represent an almost linear relationship, meaning that Aurora has realized consistent improvements in moving towards profitability on a basis of its adjusted EBITDA. If this trend remains consistent, Aurora should realize positive adjusted EBITDA by Q1/20. However, there are various catalysts that could help Aurora Cannabis achieve positive adjusted EBITDA as soon as Q4/19. With Aurora’s production ramping up, ACB continues to scale up manufacturing capacity, with innovation and technologies aimed to reducing time from harvest to market. Increasing processing, packaging, and delivery efficiencies in Q4 is expected to accelerate the availability of product. Supply to Europe and other international markets is expected to increase as more of Aurora’s production facilities receive EU GMP certification. Recently, the Bradford facility has undergone an audit to obtain EU GMP certification. In Q3/19, Aurora commenced exporting full spectrum cannabis extracts in Germany. Management anticipates these sales will contribute to growth, given the higher margins in extracts. With Aurora Sky now operating at full capacity, the Company also anticipates continued reduction in production and manufacturing costs, allowing cash costs per gram to continue to trend lower. Aurora Cannabis believes that it can achieve an average cash cost per gram below $1 at its Sky Class facilities.

Shares of Aurora Cannabis have climbed more than 33% year to date to its current price of $9.05, compared with a 27% gain for Canopy Growth Corp., and a 7% advance for Aphria Inc. during the same time.

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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