Auxly Is Cashed Up and Ready To Continue Executing on It’s Canadian Cannabis 2.0 Strategy

Last week, Auxly Cannabis Group Inc. (TSX: XLY) (OTCQX: CBWTF) strengthened its balance sheet and closed an $8 million private placement offering of units to an institutional investor. The Canadian cannabis company plans to use the proceeds for working capital and general corporate purposes.

We believe the timing of the financing is strategic as Auxly works to capture additional market share of Canada’s recreational cannabis market. During the last year, the company has been highly focused on the cannabis 2.0 opportunity in Canada and has formed relationships with leading US brands. 

Over the next year, we expect Auxly to report ramping revenue from the cannabis 2.0 market and we are especially favorable on the relationship it has with Dosist. Through this relationship, the company is uniquely positioned to capitalize on the cannabis vaporizer market in Canada and we expect this product to be a major revenue generator for the business. 

The last few years have been difficult for Auxly and we believe the company has been trying to improve its image after Cannabis Wheaton flopped. We are favorable on how the management team pivoted the business away from its initial business model and will monitor how the market responds to the continued execution. 

When a cannabis company has a murky past, it is tough to completely remove all of the blemishes from the business. We believe that Auxly is facing an uphill battle and expect it to continue to raise capital to fund high-impact growth initiatives. 

While we are favorable on how the business has evolved since 2017, we continue to believe that there are better opportunities available. The next year is crucial for Auxly and would not be surprised to see the business be acquired. At current levels, the valuation is reasonable and this is an opportunity we will continue to follow from the sidelines. 

If you are interested in learning more about Auxly, please send an email to support@technical420.com with the subject “Auxly” to be added to our distribution list.

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Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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