It's been a bumpy ride for so-called pot stocks over the last few years, as some balance begins to be realized while the newness of legal cannabis wears off some. That's not to say that volatility is over; it's just simmering lately as the wheat is being separated from the chaff and fly-by-night companies disappear, while those with merit maneuver to establish a market footprint.
Looking to benefit from synergies, Aurora Cannabis Inc. (TSX-V:ACB)(OTCQX:ACBFF) and WeedMD Inc. (TSX-V:WMD) on Wednesday morning announced a new strategic relationship.
Per the pact, Vancouver-based Aurora will provide cannabis counseling and outreach services through its CanvasRx unit to WeedMD. In return, Toronto-based WeedMD will provide wholesale dried medical cannabis to Aurora.
No details on reciprocity with respect to exchange of goods and services (i.e. "Our services are worth x amount of cannabis" or vice-versa) were disclosed. Only ambiguous commentary was provided, such as WeedMD "to wholesale product to Aurora for demand above and beyond WeedMD's own patient requirements."
Aurora CEO Terry Booth said that he has been following along with WeedMD since being introduced to the company three years ago. He is confident in the quality of WeedMD's cannabis meeting their high standards and sees value in expanding their product bag to include new marijuana strains.
WeedMD chief executive Bruce Dawson believes the partnership will have a meaningful benefit for his company on several fronts, including brand recognition and patient engagement.
As the legal marijuana market matures, there is likely to be far more partnerships and consolidation. These companies are looking to capitalize on a rapidly growing patient population.
At the end of September 2016, there were 98,460 registered patients under Health Canada’s Access to Cannabis for Medical Purposes Regulations with estimates for 10% monthly growth.
With the consensus that the Canadian government will introduce legislation to legalize recreational marijuana this year, expectations for an exponential surge in demand is looming on the horizon.
