The Fight for the Australian Cannabis Market – Aurora and Canopy Growth Corp Could go Head to Head

Canopy Growth Corp stocks (TSE:WEED) are continuing an upward surge today after a strong end to last week. Prices have jumped 10.13% to $30.11 CAD in the past 24 hours, bringing the firm’s market cap to just under $6 billion CAD. The rise follows the firm’s announcement that it has launched its Australian wing named ‘Spectrum’. 

Spectrum’s facility in Victoria will allow the cultivation of high-quality medical cannabis for Australian patients. The facility will also operate as Spectrum’s Asia-Pacific (APAC) headquarters. At the time, Spectrum’s managing director Ben Quirin said: “Victoria is now home for Spectrum as we introduce our world-renowned medical cannabis products to the State, across Australia and throughout the entire APAC region”. The development comes as legal cannabis regimes are being established, according to Quirin. 

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Meanwhile, there has been some speculation that Aurora Cannabis (TSE:ACB) – Canada’s second-largest cannabis producer – is considering a takeover of Australia’s largest – and first – licensed cannabis producer Cann Group. The assertion, stated in a report by the Australian Financial Review (AFR), has since been denied by Aurora, who stated: “Aurora wishes to advise that while it has had preliminary discussions with Cann in relation to a potential transaction, no offer has been submitted,” also adding that there is “no certainty” that any such offer will be placed. Aurora also state that this is despite their 22.9% ownership interest in Cann Group. Cann Group themselves reportedly refused to comment when approached by AFR. 

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As Aurora has stated, it is not certain that the firm will make a definite branch into Australia with a Cann Group takeover, but it would increasingly make sense. The firm has already stated itself to be Cann Group’s “cornerstone investor” since taking part in Cann’s IPO back in March 2017. With such high interest in the company, now would be the time to compete with Canopy’s recent bold step into Australia’s market. In addition, as AFR report, Aurora has been in a particularly takeover-y mood recently, having completed more than $1 billion worth of takeovers in the past six months.

Stocks in Aurora are performing well today, up 5.75% at the time of writing to $8.09 CAD, bringing the firm’s market cap to $4.53 billion CAD. 

So while it is not certain that Australia will be the next big thing for the global cannabis market, it’s certainly worth keeping a close eye on. 

Featured image: Waking Times

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