During the last year, we have been highly focused on the advancement of the cannabis industry in the European Union (EU) and have been especially bullish on the opportunity in Germany
Following a regime change in Germany, we are more confident on the likelihood for the legalization of recreational cannabis in the EU’s largest market (as measured by GDP). We have been highly focused on identifying companies that are focused on capitalizing on Germany’s burgeoning cannabis industry.
Earlier this week, Aurora Cannabis Inc. (Nasdaq: ACB) (TSX: ACB) reported to have received EU- good manufacturing practices (GMP) certification for its medical cannabis production facility in Germany. We considered the granting of the certification to be a milestone for the embattled Canadian Licensed Producer (LP) and will be monitoring how the management team ramps up operations in the country.
The production facility increases the Canadian cannabis producer’s network of EU-GMP facilities that supply medical cannabis flower and extracts across existing markets it is levered to. The development took place several years after Aurora Cannabis was awarded a contract from Germany’s Federal Institute for Drugs and Medical Devices (BfArM) to produce 1,000 kilograms of medical cannabis flower over a four year period.
Later this month, Aurora Cannabis expects to deliver the first shipment of medical cannabis flower to German pharmacies and we will monitor how the market supports the growth of the entire business. We believe the German cannabis industry is in the early innings of a major growth cycle and consider this to be one of the only attractive aspects of the business.
During the last year, the Canadian LP has been under considerable pressure and has closed several production facilities across the world to lower costs. Earlier this month, Aurora Cannabis released third quarter financial results and reported a loss of approx. C$1 billion. A good portion of the losses are from the closing of production facilities and we would not be surprised if additional facilities were closed this year.
Although Aurora Cannabis claims to have leverage to cannabis markets that are located on four continents, the management closed facilities on three of them. We do not consider the closures to be a bullish indicator and remain cautious with the Canadian cannabis company. While we are bullish on the leverage to Germany, it will take a while for revenues to ramp up and will monitor how the management team is able to execute.
If you are interested in learning more about Aurora Cannabis, please send an email to email@example.com with the subject “Aurora Cannabis” to be added to our distribution list.