Marijuana companies – smart moves

Marijuana companies have to know at this time their primary objective is the following: obtain real assets other than market goodwill, and do it quickly as possible.

To this effect, you have companies raising cash like mad. Canopy Growth (TSX: WEED) raised $175 million earlier this year. Aurora (TSX: ACB) is buying other marijuana companies like crazy with its inflated stock.

The recipients of these gushes of cash are the ones that will be making the better deals. Here’s an example: Today, an announcement that Aurora is buying nearly 25% of Liquor Stores NA (TSX: LIQ) with warrants to buy more of the company if the stock goes higher.

This works very well for Liquor store management, who will be getting a huge cash injection at an equity price well above market. It works for Aurora, who is trying to desperately diversify into other assets beyond their own stock price.

How did Aurora pay for it? A $200 million bought deal convertible debt financing, earlier in January! Some people have money to throw away I guess!

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