ACB - Why Aurora's Expansion Into the U.S. Market Really Isn't All That Exciting
In recent weeks, Aurora Cannabis (NYSE: ACB) stock has seen new life. It all started with the company releasing its third-quarter 2020 results on May 14, which showed 18% revenue growth from the prior period. A commitment to further improving its costs also gave investors a reason to be hopeful that profitability may not be just a pipe dream.
Then, on May 20, the cannabis producer also announced it was acquiring Reliva, a cannabidiol (CBD) brand that would allow it to penetrate the U.S. market. As exciting an opportunity as that may seem at first glance, here's why investors shouldn't put too much stock in it.
Many headlines advertise Aurora's recent acquisition as the company getting into the U.S. CBD market. While it's technically true, it deserves an asterisk at the very least. All forms of CBD aren't legal in the U.S. (federally), and Aurora can't offer non-hemp products that contain more than 0.3% of tetrahydrocannabinol (THC). However, U.S. cannabis companies that don't operate nationally and instead operate within states that allow medical or recreational pot aren't limited to those constraints. And until the U.S. government legalizes medical or recreational marijuana, it's a limitation Canadian cannabis companies will face.