Aurora Cannabis Inc. shares were in focus again Thursday, as investors continued to digest weaker-than-expected earnings and the company’s plans to grow its business.
Chief Executive Terry Booth told analysts on Wednesday’s earnings call that, while wellness drinks are likely to become a success, he does not expect cannabis drinks to become a big market once derivatives are legalized in Canada in October. The market for intoxicating cannabis-based drinks has not proven to be popular anywhere, he said.
Aurora is expecting the European market to become a big draw for Canadian companies, given that there is currently little competition and limited supply. The company has investments in Italy, Germany, Malta, Portugal, the United Kingdom and the Netherlands and pointed out that there were only three companies that were awarded contracts to distribute cannabis in Germany.
Aurora ACB, -0.34% ACB, +0.00% Chief Corporate Officer Cam Battley talked to MarketWatch’s Max A. Cherney after the call to outline the company’s thinking about its future. (For more, read: Where Aurora sees cannabis opportunity beyond selling buds in Canada.)
GMP Securities analyst Martin Landry noted that Aurora had the highest international sales of cannabis in the first quarter, at C$4 million, putting it in a strong position versus peers.
“With a presence in 24 countries and two facilities with an EU Good Manufacturing Practice certification, Aurora is well positioned to continue to grow its international sales and capitalize on the market opportunity which could dwarf the domestic market over time,” he wrote in a note Thursday. Landry rates Aurora a buy with a C$15 stock price target that is about 75% above its current trading level.
In regulatory news, a bill was introduced to Congress on Wednesday that seeks to address the problem facing people entering the U.S. who work in the legal cannabis industry in other jurisdictions, as advocacy website Marijuana Moment reported. The bill, called the Maintaining Appropriate Protections for Legal Entry, or MAPLE Act, would ensure that noncitizens are not penalized under federal law because they work in the cannabis sector in a place where it is fully legal.
The bill is necessary because U.S. Customs and Border Protection has said it would ban Canadian citizens visiting the U.S. if they admit to investing in the cannabis sector, even though adult recreational use has been fully legal in Canada since last October. CBP deems any investment, even in medical cannabis, to constitute a crime because cannabis remains a Schedule I drug in the U.S., which groups it along with heroin.
Rep. Earl Blumenauer, a Democrat from Oregon, said Congress needs to address the policy gap created by conflicting cannabis laws. “This chaos must end, and the only way to do that is to end [the] marijuana prohibition once and for all,” he told Marijuana Moment.
The bill would also address deportation policy, which currently allows for immigrants who use or work with cannabis in legal jurisdictions to be removed. U.S. Citizenship and Immigration Services recently published a memo that explained that such workers could be deemed ineligible for citizenship as the federal view suggests they do not possess “good moral character.”
MarketWatch has spoken to Canadian entrepreneurs who were subjected to a ban on entering the U.S. after admitting even tangential ties to medical cannabis.
New Jersey lawmakers have given up their effort to draft legislation for legal recreational cannabis, and will instead put the question on the 2020 ballot for voters to decide. Senate President Steve Sweeney, a Democrat, said his chamber will push ahead with a plan to expand the state’s medical program and for legislation that would expunge the records of those convicted of nonviolent cannabis-related crimes.
Lawmakers in New York, meanwhile, are planning to introduce a new cannabis bill that they hope will become law, after an earlier effort failed. The bill includes creating a single governmental unit that would regulate and oversee all cannabis-related products. Some of the revenue collected from taxes would be used to invest in communities that were disproportionately affected by cannabis prohibition, and records of nonviolent crimes would be expunged.
In case you missed it: Why New York’s plan to legalize cannabis for adult recreational use is a big deal
A survey of bankers across the nation country more than eight in 10 believe the federal government should allow banks to serve companies in the legal cannabis sector. The survey of 453 banks, conducted by Promontory Interfinancial Network, found support was highest in the West at 89% and the Midwest at 85%. The survey comes as amid widespread support for a bipartisan bill that would protect banks that serve the sector.
Supreme Cannabis Co. Inc. shares SPRWF, -0.72% FIRE, +0.53% rose 1.4%, after the company said it’s acquiring Blissco Cannabis Corp. in an all-stock deal valued at about C$48 million. Blissco is a wellness brand that makes cannabis oils and is based in Langley, British Columbia. Blissco shares HSTRF, +4.88% fell 5%.