Vancouver's Auxly Cannabis Group (OTCQX:CBWTF) (TSXV:XLY) has officially added another company to its portfolio. The company signed a definitive agreement with Ontario's Curative Cannabis. Let's check in with how CBWTF stock is reacting to the news.
CBWTF: The Deal
Auxly Cannabis Group will acquire 46% of the common shares of Curative and "enter into a long-term cannabis purchase and sale agreement to fund the construction and development costs of Curative’s cannabis cultivation facility in Chatham-Kent, Ontario."
Currently, CBWTF is looking positive, but there certainly hasn't been any sort of momentous stock jump on the news. Maybe this shouldn't surprise you, though. Auxly is investing a lot of cash to develop a facility it can't yet know will actually pay off.
On paper it sounds good:
"The Facility is designed as a purpose-built indoor facility for the production of ultra-premium cannabis product. With an initial footprint spanning approximately 30,000 square feet, the first phase of the Facility is expected to yield approximately 2,900 kg of cannabis per annum."
But is there really such a high demand for craft cannabis, which is Curative's specialty?
Craft Cannabis
Curative focuses on highly cultivated and curated strains of cannabis. It's "premium, top-shelf, artisan line of cannabis strains [is] quickly gaining a reputation as the king of craft cultivation."
Auxly—as a cannabis financing company—has now definitely closed the deal with Curative to buy 46% of the company along with 50% of the cannabis it grows for the next 20 years. But will craft cannabis be enough to see CBWTF turn a profit for investors?
>> Tilray Stock: Tilray Doubles Canadian Cultivation, Watch out Canada!
Auxly will provide all the funding Curative needs for building facilities, along with operational costs. It will also provide Curative with a licensed dealer, distribution channels, regulatory oversight, and infrastructure.
CWBTF Reaction
Selling for $0.67 USD at present, Auxly shares have been steadily decreasing this week. After hitting a high of $0.71 only one week ago, CBWTF has been struggling to keep the momentum going.
The key to this deal paying off will be the demand for craft, artisan marijuana products. This could be why CBWTF stock isn't reacting as positively as it could be to this deal today; are investors questioning Canadians need for 'fancy' cannabis?
Featured Image: Canva
