Aurora Cannabis is making money on investments, not on weed sales

Aurora Cannabis released their quarterly report which showed that the company is making the bulk of its money from investments in other companies.

The recreational cannabis market may be blooming in Canada, but Aurora certainly isn’t feeling those effects yet.

The company published its quarterly financials which show that Aurora is making the bulk of its earnings on investments they made earlier.

The Edmonton-based company posted revenue for the first period of 2019 financial year, which was said to be $29.7 million.

Aurora posted that their first-quarter net earnings rose to C$105.5 million from C$3.6 million a year ago, and C$79.9 million in the previous quarter.

Investments still make the most

The biggest surprise was that Aurora’s investments in other cannabis businesses such as Green Organic Dutchman Holdings have been bringing in most of the earnings.

The TGOD stock started a sharp rise from its $4 CAD position and traded between $5 and $8 for most of the summer.

The company also reported earnings of $104 million which come from a $144 million gain on its shares of TGOD and other unrealized gains on other financial holdings.

Even though the company had a very decent showing at the start of recreational sales, that was too little too late to make an impact on this quarter.

Aurora sold around 2,676 kilograms of cannabis during this quarter, although much of that was sold to medical patients.

The average net selling price was $9.19 per gram this, which is 12% up compared to a year ago, but that’s probably due to a steeper pricing in the adult sector.

Aurora made around C$500,000 from adult recreational sales in the quarter. CEO Terry Booth says that the pre-rolled cigarettes were, unexpectedly, the best selling product.

The shortage is going to last

While we’re talking about the sales of recreational cannabis, we can’t not talk about the shortage that came about a few days later.

As more and more stores started hanging the “out of stock” signs on their doors, more and more Canadians started to worry. How long will the shortage last?

The answer to that question is tricky, but it could be just this—for another two years or so, most likely.

Terry Booth says that Aurora is currently figuring out how to allocate its supply between recreational buyers and medical users.

Even though most of their business is paid for by medical users, it would seem that they don’t have preferential treatment, such as the case is with other companies.

Aurora reported that the company has 67,484 medical users, which is a 250% increase compared to Q1 last year.

That huge number of users combined with Aurora’s promise to keep their registered users supplied is going to be hard to achieve while trying to dominate the recreational market.

If this shortage continues and we see Aurora focus on the sales of recreational cannabis instead of the medical market, they could see a huge number of medical users move towards other LPs.

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