As measured by the success the Wagner Dimas platform, marijuana smokers like a well-rolled joint, but many can't do it on their own. Last year, the platform was used to pre-roll more than five million joints and cones, making it one of the top, if not the top, pre-roll platform in the world. Privately-held Wagner Dimas caught the eye of active operator and cannabis investor CannaRoyalty (CSE:CRZ)(OTCQX:CNNRF), including the Ottawa-based company increasing its stake in Wagner Dimas last September to 22 percent. CannaRoyalty also acquired exclusive Canadian rights to all of Wagner Dimas' assets related to large-scale manufacturing of pre-rolled marijuana cigarettes.
Early Wednesday morning, Edmonton-based Aurora Cannabis (TSX:ACB)(OTCQB:ACBFF), one of the biggest cannabis companies globally, and CannaRoyalty jointly (no pun intended) announced that the companies have struck a deal for Aurora to license the Wagner Dimas technology. For C$7 million in ACB stock, Aurora will have exclusive rights to the IP in the burgeoning Canadian markets. On June 20, Canada passed Bill c-45, better known as the Cannabis Act, that legalize recreational marijuana across the country beginning October 17, 2018, making Canada the first G20 country (and only second country in the world behind Uruguay) to end marijuana prohibition.
There was no mention as to how the deal relates to supplying markets in any of the other 13 countries on five continents that Aurora has operations. The technology is a natural fit for the vertically integrated company that currently has funded capacity of 430,000 kilograms (474 tons) of marijuana per annum. In the United States, the Wagner Dimas technology is licensed by Herban Engineers, a supplier of pre-rolled and pre-packaged joints for more than 30 leading cannabis brands throughout California, the world's biggest pot market.
"This agreement reflects Aurora's strategy to continue broadening our high-quality product portfolio by expanding into value add products for both the medical and adult consumer markets," said Aurora chief executive Terry Booth in this morning's news release.
This isn't the first time that Booth has hawked an investee of CannaRoyalty. Last month, CannaRoyalty portfolio company Anadia Labs agreed to be acquired by Aurora for approximately $115 million, bringing a leading analytics, testing and genetics outfit under the Aurora umbrella, while CannaRoyalty turned its 16.5% stake and initial $4 million investment into about $19 million.
Talking briefly about the recent divestment, CannaRoyalty CEO Marc Lustig said, "The agreement to transfer our Canadian license to the Wagner Dimas technology aligns with and advances our focused business strategy of building out our distribution and brand network in our core market of California."
Getting exposure to Aurora's growth potential isn't exactly a bad thing either. Once selling as cheap as $1.56 per share in November 2016, shares of ACB ballooned as high at $15.20 early this year before dropping as part of a broader industry sell-off to as low as $6.75 in April. Shares have taken back part of the lost ground, including closing at $9.12 on Tuesday.
Meanwhile, CRZ stock has brought a nice return as well. Coming public late in 2016 and trading around $3 during the first part of 2017, the stock sunk to $1.50 last June before it turned upward and has barely looked back. The stock printed an all-time high of $5.75 in January and has come close to that twice lately ($5.66 in May and $5.70 in June). Shares inched 6 cents lower in Tuesday trading to close the day at $4.88.