Aurora Cannabis Inc is one of the world’s leading cannabis companies. Over 32 million shares in it are available. Headquartered in Edmonton, Alberta, in Canada, the company can produce more than 1,300,000 pounds of the drug a year. It operates in 24 countries, in every continent.
Aurora is good both vertically and horizontally, present in every key segment of the value chain. This covers facility engineering and design, cannabis growing, genetics research, home cultivation and wholesale and retail distribution. Its facilities are purpose built and utilise cutting-edge technology, with extensive automation. It’s such a worthwhile entity, and in 2018, the AP7 pension fund run by the Swedish government bought shares in it.
The purchase was reported by the Swedish business magazine Affärsvärlden. The stake was 63 million Swedish kroner (£5.2 million) in stocks of Aurora and also Canopy Growth, two of the top 10 most-traded shares in Sweden, putting them alongside such giants as Ericsson. This stake has since risen in value to 100 million kroner (£8.3 million), so it was a wise move. Joakim Bornold of the online broker bank Nordnet AB declared that “[o]ut of nowhere,” interest in stocks in Canadian cannabis companies had “completely exploded in Sweden.” He explained, “That’s where the money is, if there’s a will to continue legalizing markets.”
The AP7 equity fund might invest in any stock included in the Morgan Stanley Capital International All Country World Index (MSCI ACWI) unless it has blacklisted the company. The MSCI ACWI covers over 2,700 stocks in 23 developed markets and 24 emerging markets. Aurora made its entrance in 2018. The Council of Ethics of Sweden’s AP Funds disapproves of the purchase of cannabis stocks, but AP7’s fund managers ignored this.
Pension funds often don’t wish to associate themselves with cannabis, and AP7’s view may yet change. Nordnet AB’s Bornold cautioned that cannabis stocks might find themselves blacklisted in the future: “[I]f the wind turns, that gigantic market will close as fast as it opened.”
It wasn’t the first government body to do this, either
The Swedish one isn’t the first government body to purchase cannabis stocks. Canada’s Public Sector Pension Investment Board bought shares in four cannabis companies in 2018: not just Aurora and Canopy Growth but also Aphria and Cronos Group. The stake in Aurora was C$12.7 million (£7.3 million), less than was held in Canopy Growth.
Governments buying shares in cannabis companies makes it appear legitimate. Before this, people often regarded cannabis company stocks as highly risky. But when governments invest the money of public employees’ retirement funds, this worry goes away. It might just be like buying shares in Amazon back when they were dirt cheap.
Aurora recently announced that it had expanded the amount of cannabis it grows from 1.3 million to 1.62 million square feet a year, 33 percent more than was originally planned. There will be more than a million plants at any one time. Stocks rose in value by 70 percent so far this year. The sector exhibits great growth potential.