Cannabis stocks have had a bit of a mixed period over the past week or so, but one stock that has managed to record impressive gains is that of Auxly stock.
Agreement with Delta 9 Cannabis
Back in February, Auxly Cannabis Group (TSXV:XLY) (OTCQX:CBWTF) announced that it had entered into a partnership agreement with Delta 9 Cannabis. This is a significant development for Auxly since big-ticket partnerships are expected to be the driver of growth in the cannabis space.
Delta 9 is both a cannabis producer and retailer. According to the terms of the partnership agreement, Auxly Cannabis Group is going to supply Delta 9 stores in Manitoba with cannabis derivative products.
Auxly stock has rallied by 20% over the past week, but it remains to be seen if it can stretch those gains further.
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According to that agreement, Delta 9 will send Auxly 5,000 kilos of trimmed cannabis and dried cannabis flower per year. The agreement is going to be in place until 2030, and Auxly has already invested $16.25 million in Delta.
Prior to the signing of this deal, Auxly stock was performing quite poorly. By the middle of February, Auxly stock had tanked by as much as 25% in the preceding month, despite several positive developments coming Auxly Cannabis Group's way.
One such development was Auxly stock being added to the influential S&P/TSX Cannabis Index in January. Stocks are only added to this index after careful consideration, so it's inevitably a big deal to be added. Despite the slump at the time of this announcement, the signs were good, and it seems more likely that a wider crisis in the market, such as the many layoffs and executive change-ups that were happening, was actually the reason behind the fall in Auxly stock.
What do you think?
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