By Ciara Linnane, MarketWatch
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 /zigman2/quotes/210559470/lastsale ACB +2.07% /zigman2/quotes/203734337/delayed CA:ACB -2.33% 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.