Aurora Cannabis Opens New Facility, Raises Investment in Choom

Canadian licensed producer (LP) Aurora Cannabis (TSX:ACB; NYSE:ACB) kickstarted the week with two hefty announcements on Monday (November 5). 

The cannabis giant announced that it has officially opened its indoor premium cannabis production facility in Quebec, in addition to increasing its investment in cannabis retailer, Choom (CSE:CHOO) through a non-brokered private placement.

As a result of two announcements on Monday, the company’s shares on the Toronto Stock Exchange increased by 3.91 percent to close the trading session at C$9.56.

Aurora’s newest production facility, called Aurora Eau, is located in Lachute, Quebec and spans 48,000 square feet. The facility is comprised of 11 purpose-built grow rooms, which will allow the facility to produce up to 4,500 kg of cannabis annually.

This is Aurora Cannabis’ second production facility in Quebec, with the first one being Aurora Vie, an indoor growing facility in Point Claire.

Terry Booth, CEO of Aurora Cannabis, said the company is “thrilled” with its latest facility and looks forward to continue investing in Quebec. He noted that the Aurora Eau facility, in particular, has “incredible potential.”

“[Aurora Eau is] designed to be a place where our expert cannabis cultivators have the flexibility and control to produce some very special high-end varieties that few commercial growers are prepared to tackle. We intend to make some very rare and exciting products there,” Booth said in the release.

That said, the company also increased its investment in Choom Holdings by an additional C$20 million, which translates to a conversion price of C$1.25 per common share with a four year maturity date.  Aurora has also been granted the opportunity to acquire up to 40 percent in Choom at C$2.75 per common share.

“Through this strategic investment, Aurora further diversifies its retail strategy, with additional retail opportunities across Western Canada, and future potential opportunities in the Ontario market,” Booth said in the release. “We are pleased to increase our stake in Choom and support them as they execute on introducing their unique retail brand to Canadian cannabis consumers.”

According to the release, Choom is in the process of developing a network of retail stores that will feature selected products from a variety of LPs.  It has secured the rights to 45 retail opportunities within Western Canada. This includes 45 applications submitted, with 27 of those as development permits and the remaining 18 as building permits.

Thanks to the investment from Aurora, Choom plans continue expanding in the retail Canadian cannabis adult market.  Choom plans to use the proceeds for working capital and general corporate reasons.

“Aurora’s continued confidence and investment allows Choom to provide high quality cannabis to a broader market of consumers across the entire country and expedite our expansion and the roll out of store openings,” Chris Bogart, president and CEO of Choom, said in the release.

Shares of Choom, however, took a dip on the Canadian Securities Exchange following the announcement on Monday. As of market close, Choom’s stock dipped to C$0.89, which is a 3.26 percent decrease over Monday’s trading period.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.