Monthly Archives: May 2020

Therabody will continue to embody Theragun’s initial mission and dedication of leading the tech health area by developing advanced items using exclusive innovation to provide natural health options for everybody. In addition to the Therabody rebrand, the company is releasing a proprietary USDA certified natural CBD line, TheraOne this summer as well as Theragun’s Fourth generation percussive massage gadgets with the intro of the brand’s brand-new exclusive motor utilizing QuietForce Innovation and Smart Percussive Therapy, effortlessly integrating with the updated Therabody app.

The brand-new product launches and combinations has actually resulted in a natural development for the company to evolve into its brand-new name. “Since the day I created Theragun to assist me with the pain caused by a bike accident, our objective as a business has been to assist others with their muscle tension and pain, whether it’s for an injury, a disorder or working out,” said Dr. Jason Wersland, Founder and Chief Health Officer of Therabody. ” We desire our customers to know under particular circumstances there are options to taking discomfort medication and Theragun has actually been among them. Now, with the launch of TheraOne, we are able to offer our consumers another natural health option that is not just reliable on its own, but likewise complements our Theragun Percussive Therapy gadgets. I’m delighted with this turning point of introducing Therabody and how it allows us to help more people. We are simply getting started as we continue to develop items backed by science that can further assist people feel better, naturally.”

Therabody’s goal is to develop product or services that educate and empower consumers to be in control of their own health. While the brand name will continue to champion availability and inclusivity through the products, services, and research study that Therabody has to offer, it will also offer more services that are both natural and efficient, additional assisting the neighborhood. Theragun and TheraOne are the two current departments under the new Therabody with strategies to establish and broaden into additional sectors in the future.

As far as rebranding during a pandemic, they did a face a couple of challenges and even needed to delay numerous of their launches. “Our initial launch date was just as COVID-19 started to strike the United States hard. Offered the timing, and our authentic commitment to health and wellness, we made the difficult choice to postpone the launch of our brand-new items,” shared CEO Benjamin Nazarian. “However, we have actually had the chance during this difficult time to contribute Theragun to medical facilities around the world and see the effect Theragun has been having on our frontline employees. We’ve also concentrated on giving back to those in need, contributing 250,000 meals to Feeding America.”

Nazarian and the group felt it was the right time to reveal the rebranding this previous week as more people have actually ended up being more accustomed to life in your home. Coronavirus has also affected Therabody to go back toddler beneficiary roots. “Due to the modification in the retail environment, we have highlighted our e-commerce channel, which is how we started as a business. We are excited to launch our new product line and share the next chapter in our story with our neighborhood as the stay at home policies are slowly starting to come to an end throughout the nation,” Nazarian continued. TheraOne is s lated to introduce in summer2020 With more than 2 years of dedicated research study and development prior to its launch, the TheraOne portfolio will consist of five brand-new proprietary full- spectrum CBD items that are all-natural and toxic substance totally free. The 5 new products were likewise formulated utilizing patent-pending Biosorb ™ technology to optimize the absorption of all the natural advantages the plant has to offer.

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In 2017, when celebrity host (The View) Whoopi Goldberg was enjoying the high point of her then-new CBD brand, Maya & Whoopi, a reporter asked what the next step was. “World domination,” Goldberg joked at the time.

She might have been onto something.

Goldberg this year parted ways with her business partner, Maya Elisabeth; the result was that their company folded. But if Goldberg back in 2017 was predicting a big future for CBD startups, she wasn’t off the mark, judging from a the findings of a new survey from New Frontier Data.

“The newness of the CBD experience for most consumers suggests there remains significant opportunity for well-developed brands to attract consumer attention and capture market share from existing market leaders,” the report says. A big reason why startups might have an edge, the researchers imply? The novelty factor.

“Consumers have not been using the products with sufficient longevity to create durable brand loyalty that is difficult to dislodge,” the report says.

To compile the study, New Frontier Data surveyed 4,074 U.S. adults in mid-March. The survey population consisted of 26% of subjects who earned less than $30,000; 27% earning $39,000 to $59,999; 27% earning $60,000 to $89,999; and 16% earning $90,000 and up.

Among the report’s chief takeaways:

Familiarity with CBD is an important factor

·     CBD is hardly unknown to the American mainstream. “Nearly 9 in 10 Americans are familiar with CBD,” the report says. Some 86% of those surveyed had heard of CBD, and a majority (55%) were interested in learning more. Younger cohorts tended to be more interested than older groups.

·     Word of mouth is a common thread: Nearly 3 in 4 (73%) of those surveyed who’d heard of CBD reported having had a conversation about it, including the 67% who had not consumed it. People reported that their conversations were largely positive.

·     Positive associations: 51% of those surveyed knew a friend or family member who’d used CBD, and nearly 1 in 5 (17%) had recommended CBD to someone else.

·     Frequency: Among Americans who reported ever having consumed CBD, 40% said they did so at least once a week, with older consumers using it more frequently than younger ones.

·     CBD consumers seem to be evangelists. A majority, 56%, said they had recommended CBD products to someone else.

Stress and pain are major reasons for use

·     Three in five (60%) of consumers surveyed reported using CBD in a context that might be called “unwinding,” such as relaxation, relief of stress or anxiety reduction. The primary use, however (41%), was pain management.

Means of  Consumption

·     Oils and tinctures led the way, at 38% (of the ways in which consumers surveyed consume CBDs). Topicals were the next most widely used method, at 19%; then: food or drinks, 18%; flower, 8%; pills/capsules, 7%; and vaping, 7%.

·     Some 43% of consumers said they used less than 30 mg. a day; 22% reported using 50 mg. or more; and 12% used 100 mg. or more a day.

·     Some 65% of consumers surveyed said CBD had positively affected their quality of life. Only 2% described a negative effect.

Level of expenditure

·     Most consumers (59%) said they spent less than $50 a month on CBD.

Gender Differences

·     Some 46% of male consumers surveyed said they used CBD at least once a week, versus 36% of women in the survey population.

·     On average, men spent more for CBD than did women. Men were more likely (21%) than women (12%) to spend more than $100 per month. Purchasers ages 35 to 54 were the most likely (21%) of any group to spend more than $100 per month.

Decision Factors

·     CBD purchasers reported being generally happy with the products they were able to purchase, depending on the regulations in their geographic area; 71% agreed they were satisfied with their purchases.

·     When selecting which CBD product to purchase, price and quantity of CBD were the most important factors to those surveyed. Convenience of location and service from staff were also important criteria.

·     Some 51% of purchasers said they usually purchased familiar brands. About 29% said they would be likely to purchase CBD in the next six months.

Where the Opportunities Lie

For CBD startups, the women’s market for might be one smart place to focus, considering that male survey respondents were far more likely (21%) than women (12%) to spend more than $100 per month.

Another wise move might be to market only products backed by clinical studies and clear, authoritative information. The reasons here would be the importance consumers put on reliable information, as well as the strict FDA restrictions against promoting CBD for medical purposes.

Infusions as a method for consumption also seem to be of growing interest, while smoking is losing users due to social norms, especially during the current COVID-19 crisis when so many cannabis medical users are housebound.

Finally, given the anxiety during the crisis and the prevalence of word of mouth in spreading information about CBDs, companies might want to turn to such marketing channels as referral discounts, loyalty programs and high-production-value consumer testimonials, according to the New Frontier Data report.

In recent weeks, Aurora Cannabis ( NYSE: ACB) stock has seen new life. It all began with the business launching its third-quarter 2020 results on May 14, which revealed 18%revenue development from the prior period. A dedication to more improving its costs likewise provided financiers a factor to be hopeful that success may not be simply a pipe dream.

Then, on May 20, the marijuana producer also announced it was acquiring Reliva, a cannabidiol (CBD) brand name that would allow it to penetrate the U.S. market. As amazing an opportunity as that might seem initially look, here’s why investors shouldn’t put excessive stock in it.

It’s entering an already crowded hemp market

Many headlines advertise Aurora’s recent acquisition as the company getting into the U.S. CBD market. All types of CBD aren’t legal in the U.S. (federally), and Aurora can’t provide non-hemp items that include more than 0.3%of tetrahydrocannabinol (THC).

Image source: Getty Images.

The excellent news is that according to research companies BDS Analytics and Arcview Market Research, the overall CBD market in the U.S. is still expected to reach $20 billion by 2024, up from simply $1.9 billion in2018 And the bad news is that the rosy outlook for CBD does not suggest the opportunity is going to equate into considerable growth for Aurora.

That’s since Aurora will not just be competing with other U.S. companies for market share, but with Canadian pot stocks that are also looking to benefit from the opportunities in the hemp market. The business’s essential rival, Canopy Development ( NYSE: CGC) is already in the CBD hemp market in the U.S., and one of the relocations it’s making to cut expenses is to really stop farming for hemp at its Springfield, New York location. The pot giant stated it had “an abundance of hemp produced in the 2019 growing season” that it was going to offer initially prior to making more. It’s not just Canopy Development that has an excess of supply, either; it’s a problem for the whole industry.

Julie Lerner, who is CEO of the PanXchange where hemp is traded, confirmed in January that there was much more supply than demand for hemp. That’s not going to bode well for a business like Aurora, which is trying to enhance on its margins and get closer to profitability.

Having access to thousands of places doesn’t guarantee growth

In the news release revealing the acquisition of Reliva, there wasn’t a whole lot of information on how huge of a gamer the business is in the hemp market. Aurora referred to Reliva as “a leader in the sale of hemp-derived CBD items in the United States,” there wasn’t anything to quantify or justify that other than to say that its items were sold in more than 20,000 U.S. areas.

Hemp-derived CBD business Charlotte’s Web ( OTC: CWBHF), offers its products in fewer areas, and it has far stronger sales. In the company’s first-quarter results, launched on May 14, Charlotte’s Web revealed that its reach exceeded 11,000 areas which its sales for the three-month period totaled $215 million. And although it’s seen an increase in the number of shops carrying its products, that hasn’t equated into substantial growth.

A year back, the company tape-recorded sales of $217 million when its products were in more than 6,000 locations. The increase in locations over the previous year hasn’t resulted in a surge in sales for Charlotte’s Web, and Aurora investors shouldn’t make the error of presuming more areas indicate greater earnings.

The move doesn’t make Aurora a much better buy

Aurora expects Reliva to assist the Alberta-based pot manufacturer inch closer to achieving a favorable adjusted earnings before income, taxes, depreciation, and amortization (EBITDA) figure. With Aurora sustaining an adjusted EBITDA loss of 50.9 million Canadian dollars in Q3, it has a long method to go to reach breakeven, with or without Reliva. The acquisition may help play a small part in improving Aurora’s bottom line, but the company still has a lot of work to do in enhancing its financials.

The only certainty, it appears, is that the deal will lead to more dilution for shareholders. The business expect the offer will close in June, and it will cost Aurora as much as $45 million in shares.

The acquisition is a modest one for Aurora that will help contribute to its top line, however that’s about it; Aurora remains a dangerous buy, and one quarter and one acquisition isn’t going to change that. The pot stock is still down more than 80%over the past 12 months, notably even worse than the Horizons Cannabis Life Sciences ETF ( OTC: HMLSF), which has actually fallen by 60%.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy“>

A team led by scientists at Baylor College of Medication in cooperation with Medterra CBD performed the first clinical studies to assess the prospective healing effects of cannabidiol (CBD) for arthritic discomfort in canines, and the results could lead the way to studying its effect in people. Researchers focused first on these animals since their condition closely mimics the characteristics of human arthritis, the leading cause of discomfort and impairment in the U.S. for which there is no reliable treatment.

Published in the journal Discomfort, the study first showed both in lab tests and mouse models that CBD, a non-addictive product derived from hemp (cannabis), can significantly lower the production of inflammatory molecules and immune cells associated with arthritis Subsequently, the study revealed that in dogs diagnosed with the condition, CBD treatment substantially enhanced quality of life as recorded by both owner and veterinarian assessments.

” CBD is rapidly increasing in popularity due to its anecdotal health benefits for a range of conditions, from minimizing stress and anxiety to assisting with movement conditions,” said corresponding author Dr. Matthew Halpert, research faculty in the Department of Pathology and Immunology at Baylor. “In 2019, Medterra CBD approached Baylor to conduct independent clinical research studies to determine the biological capabilities of several of its products.”

In the present study, Halpert and his colleagues first measured the effect of CBD on immune responses associated with arthritis, both in human and murine cells grown in the laboratory and in mouse designs. Utilizing Medterra casts, they found that CBD treatment resulted in decreased production of both inflammatory molecules and immune cells connected to arthritis.

The researchers likewise figured out that the impact was quicker and more effective when CBD was provided encapsulated in liposomes than when it was administered ‘naked.’ Liposomes are artificially formed tiny round sacs that are used to provide drugs and other substances into tissues at higher rates of absorption.

Halpert and associates next evaluated the effect of naked and liposome-encapsulated CBD on the quality of life of canines detected with arthritis.

” We studied dogs because experimental proof reveals that spontaneous models of arthritis, especially in domesticated canine models, are better suited for evaluating human arthritis discomfort treatments than other animal designs. The biological characteristics of arthritis in canines closely resemble those of the human condition,” Halpert said.

Arthritis is a common condition in dogs. According to the American Kennel Club, it impacts one out of 5 canines in the United States.

The 20 client-owned dogs registered in the research study were seen at Sunset Animal Medical Facility in Houston. The canine owners were randomly supplied with identical unknown medication bottles which contained CBD, liposomal CBD, or a placebo. Neither the owners nor the vet understood which treatment each pet dog got.

After 4 weeks of daily treatment, owners and veterinarians reported on the condition of the pet dogs, whether they observed changes in the animals’ level of pain, such as modifications associated with running or gait. The dogs’ cell blood count and blood indications of liver and kidney function likewise were examined before and after the four weeks of treatment.

” We discovered motivating outcomes,” Halpert said. “9 of the 10 pet dogs on CBD revealed advantages, which stayed for 2 weeks after the treatment stopped. We did not identify changes in the blood markers we measured, suggesting that, under the conditions of our research study, the treatment seems to be safe.”.

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Not long ago, formerly acquisition-happy marijuana business put the brakes on costs. Jointly, they lost money much more frequently than they made it– so grabbing new assets to build scale ended up being a less hot concept than it had actually been a couple of years earlier.

That was then, and this is now. Recently’s huge cannabis company news was a throwback to the good old days of 2018 or so, with Aurora Marijuana( NYSE: ACB) finalizing on the dotted line for a buyout. Another crucial pot market event taking place last week came when a significant dispensary operator reporting its newest set of profits. Here’s more on both advancements.

Image source: Getty Images.

Aurora buys Reliva

Canada-based Aurora is reaching throughout the border for that acquisition. It announced it has actually agreed to purchase U.S. hemp-derived cannabidiol (CBD) products maker Reliva in an offer for roughly $40 million in Aurora common stock, plus approximately $45 million over the next two years in money, stock, or a mix of the 2 if Reliva meets specific monetary objectives.

Aurora said it expects Reliva to be “immediately accretive” in regards to every cannabis company’s favored functional metric– adjusted EBITDA. This would assist Aurora, as it’s needed by financial obligation covenants to be adjusted EBITDA-profitable total in Q1 of next year.

Aurora didn’t state whether Reliva is profitable on the bottom line; I’m assuming it’s not if changed EBITDA is mentioned in location of net profit/loss. Its annual profits is $13 million to $14 million, according to a report in MarketWatch; for scale, Aurora’s top line in 2019 struck almost $248 million Canadian ($177 million).

This buy is rather surprising, given that Aurora has actually been in retreat mode since late last year. It suspended building and expansion activities at 2 of its centers, hung a “for sale” indication on one of its greenhouses, and in the wake of the SARS-CoV-2 coronavirus furloughed around 500 of its staff members.

While investors can be guardedly positive about some recent news with Aurora, such as its newest set of quarterly results, I do not believe they ought to rejoice here.

Yes, CBD products are trendy amongst certain customers recently. They aren’t the huge and fast-growing money spinner that would make an acquisition like this have a considerable effect.

The business’s balance sheet isn’t particularly strong, and it tends to provide and invest its own stock a bit too much for convenience, in my view. The Reliva acquisition doesn’t move the needle on my typically bearish stance on Aurora– regardless of some motivating numbers in its Q3, it was well in the red for the quarter. On the other hand, it continues to struggle with a lot of the very same troubles afflicting its Canadian cannabis peers

Curaleaf’s combined Q1

Speaking of U.S. marijuana companies, recently saw the release of Curaleaf‘s ( OTC: CURLF) Q1 fiscal 2020 numbers They weren’t half bad as far as recent weed stock profits go.

The cannabis producer and retailer didn’t strike the typical analyst price quote for earnings, but it wasn’t too far from it. Plus that line product increased by practically 30%quarter over quarter to nearly $965 million. Bottom line, on the other hand, was narrower than expected and a considerable improvement over the preceding quarter’s outcome.

Curaleaf’s retail focus seems to be serving it well; dispensary openings and acquisitions were the relocations that assisted raise that top-line figure.

It’s sounding a bullish note about the rest of 2020, predicting that both revenue and the bottom line will continue to enhance. The business appears to have adequate money for now, so perhaps it won’t be tapping the financial obligation or equity markets for brand-new funding soon, as it has in the current past.

Eric Volkman has no position in any of the stocks discussed. The Motley Fool has no position in any of the stocks pointed out.”>

Austin Soldner and Michael Schaecher, the co-founders of the new sunglasses brand name Futuremood, fulfilled at the recently formed San Francisco research study and advancement lab developed by the high-end audio tech designer Bose.

The 2 were charged with working on Bose’s sunglasses wearable and bonded over a shared interest in tennis shoes and fashion. Over many discussions the 2 men understood there was an opportunity to utilize technology to rewrite the sunglasses playbook and introduce the first brand-new brand name to the market since Oakley emerged.

There was also a chance to bring the materials science and tech-forward techniques that sneaker companies have actually established to an industry that hadn’t seen any genuine technical transformations in decades.

Enter Futuremood “Auras,” which the business expenses as the first glasses scientifically evaluated and proven to modify your state of mind.

Using technology developed by the lens maker Zeiss, Futuremood’s very first glasses can be found in 4 colors– a relaxing green, a rejuvenating blue, an energizing red and a focusing yellow. The company is releasing its eyewear in two styles, a boxy, chunky frame and a more standard rounded frame.

Any mood-altering results are thanks to Zeiss’ halochrome lens innovation, which the lens manufacturer has been dealing with– and publishing documents on– to suss out the science behind its claims that using filtered light can change the way folks feel.

There’s some initial research that the company has done, but the science is still mainly unverified (Zeiss carried out 2 studies at European universities).

Schaecher and Soldner are followers, and the 2 long time tech officers see these lenses as a window into a broader world of material science experimentation and item advancement that they’re hoping to give market with Futuremood.

” If you think about sneakers and where Nike and Adidas got to where they are today, it was through development in product design and materials and branding and marketing and all of that had been missing out on from the sunglasses space,” Schaecher said.

The 2nd marketing hire at Airbnb and the very first marketing hire at the now-defunct Munchery, Schaecher understands a thing or 2 about branding. Meanwhile, Soldner, the founder of Playground.fm, and a former product designer at Jawbone, is the technical specialist and lead designer for all of Futuremood’s frames.

” We actually saw an opportunity to push the envelope in technical development and item innovation,” stated Schaecher. “We have a backlog of stuff to forge ahead of what sunglasses are.”

One thing sunglasses are is a really very big organisation. Consumers spent $145 billion on sunglasses in 2018, according to the market research study company, Grand View Research Study

If Futuremood can record even a portion of that market with its distinct spin on sunglasses, it’ll be in good condition.

As with any excellent direct to consumer item, Futuremood’s difference begins with its packaging.

In an email, Schaecher described the experience as “not as subtle as CBD, but not as strong as a shot of tequila or glass of Rosé.

” Austin and I are truly into different ways of self care and taking moments and … we thought there was a chance to bring pleasure and joy,” with the packaging, Schaecher stated. “ We do not anticipate people to be firing up Spotify playlists and incense matches each time they use things.”

Futuremood has actually been mainly bootstrapped to date, and like whatever else in the year of our Lord 2020, the company’s strategies were pushed back by the coronavirus pandemic.

” Our lenses are made in Zeiss’ Italian factory and the glasses were made beyond Shenzhen,” stated Schaecher. “We quarantined the first order for two weeks. Zeiss was right in that region of Italy that was getting hit hard. We have actually been delaying since then. It’s difficult to take into words what it’s like to grind on something for eighteen months … and then have to postpone introducing.”

Even with the pandemic, though, the business moved ahead with the design for its 2nd product, and that offers a tip for where Schaecher and Soldner want to choose their service. “We have our 2nd product line which is not mood-altering glasses,” said Schaecher. “That’s a traditional sunglasses line that utilizes titanium alloy metals that are more frequently seen in aerospace than in eyewear.”

The design visual is likewise more in the luxury vein, which Schaecher teased belonged to something that would be more at home in a Cartier showroom rather than a direct to consumer brand name’s digital store.

Right now, the business is going direct to customers through its site, but it’s looking at the capacity for some retail cooperations and field marketing when the nation opens back up for organisation.

When it comes to the mood-altering impacts and whether “wearable drug” can win market share, Schaecher is pretty positive. “Individuals absolutely have reactions,” he said. “It’s a fun, brand-new thing that’s never ever existed before.”

Boing welcomes Real Evaluated CBD as a sponsor!

Genuine Evaluated CBD is known for efforts in bringing details about the CBD products for not only established brand names, however the budding brands in the specific niche. Thanks to the laws in the United States that allow legal production of CBD items for health and research, there are some premier items on the market, but it’s essential to know what you are going shopping for to make sure the best purchase.

We at Real Checked CBD run all the items through laboratory tests and present everything in black and white for our readers. Today, we examine Charlotte’s Web and its CBD products that consist of balms, creams, tincture, edibles, and pills.
Here is a review of all the nine products of Charlotte’s Web that we checked.

This hemp-infused balm by Charlotte’s web comes with 150 mg of botanical mix hemp extract. It has a relaxing scent, and we discovered no traces of pesticides and solvents in the mix. It consists of all the goodness of CBD at 107.2 mg per pack. It likewise contains THC at 4.69 mg and CBC at 4.48 mg per package. Our test results suggest that the total CBD levels were lower than those declared on the label.

This Canine hemp-infused balm is for adult pet dogs with 450 mg of hemp extract. Our test results reveal the CBD levels are half the quantity of what the label claims. It does consist of a decent CBD quantity still together with other beneficial cannabinoids. The CBC and THC levels are at 8.67 mg and 5.53 mg per bundle; whereas, CBD levels are at 224.28 mg per package without any indication of pesticides or solvents.

This hemp-infused skin cream features 750 mg of hemp extract. It does include some CBD goodness, but our test results indicate these levels to be lower than the label’s claims. It has 19.1 mg of CBC and 14.63 mg of THC, which can be really beneficial to unwind. Plus, there is 328.74 of CBD packed in this product.

Wow, this CBD isolate cast by Charlotte’s web is among our favorites. It delivers 20 mg of CBD per drop, and our test results suggest that this tincture includes more CBD than the label claims, which is a good idea as it increases the effectiveness of this product. The CBD levels are a massive 782.81 mg per plan. There are no traces of any other cannabinoids in the tincture, and there are no solvents or pesticides.

This Web Hemp extract tincture is an exceptional CBD product that is real to its label claims. We would say a fantastic task! It offers 12 mg of pure CBD extract that provides other advantageous cannabinoids present in all-natural hemp extract utilized in this item. It includes THC, CBC, and CBG at 17.87 mg, 17.65 mg, and 3.11 mg per plan, respectively. The total quantity of CBD per package is 533.8 mg, without any trace of pesticides or solvents.

These Raspberry flavored Hemp Extract-Infused Gummies are the very first edible product on our list from Charlotte’s Web. Our lab tests found an appropriate series of CBD per canister at below 25%. However, it appears to be full-spectrum CBD and consists of CBC and THC in the mix, that makes it area on with its entire hemp extract claim. The CBD, THC, and CBC quantities are at 449.14 mg, 15.51 mg, and 38.77 mg per plan.

Over the course of nearly a week, Aurora Cannabis (ACB) has surged more than 200% from the reverse split lows near $5 before the strong FQ3 report. My investment thesis was very bullish after the transformational quarter and positive prospects for reaching EBITDA positive in the September quarter, but the stock rally to more than $17 on a small U.S. CBD acquisition is too far, too fast.

Image Source: Reliva website

U.S. CBD Deal

After the close on Wednesday, Aurora Cannabis announced a deal to enter the U.S. CBD market with the purchase of Reliva for $40 million in stock with an additional earn-out potential of another $45 million in cash or stock. The deal is adjusted EBITDA accretive basically because the company is EBITDA positive and Aurora Cannabis is still generating large EBITDA losses.

Reliva apparently has a revenue base of $14 million, making the deal relatively small in comparison to Aurora Cannabis, which is on a path toward revenues of $300 million in FY21 ending in June. As well, the deal pulls Aurora Cannabis into the U.S. market with the added complexities of operating a recreational cannabis business in Canada and international medical cannabis in multiple international countries on top of this new venture.

The deal also immerses Aurora Cannabis into a highly competitive U.S. CBD market where market leader Charlotte’s Web Holdings (OTCQX:CWBHF) has struggled. The company saw Q1 revenues decline 1% to $21.5 million due to the FDA restrictions.

Reliva has access to 20,000 retail locations in the U.S. and is ranked as the No. 1 CBD player in topicals. Unfortunately, the product category dominated by this company isn’t the one suppressed by the FDA rules which limits the sale of hemp-infused CBD in dietary supplements causing the weakness at CWH.

In addition, buying Reliva doesn’t allow Aurora Cannabis to enter the medical or recreational cannabis market. The federal government still has to approve cannabis for a company listed on the major stock exchanges to enter those markets and the company will have to buy their way into inflated stock valuations in the future.

Quickly Overvalued

Aurora Cannabis is making a wise move to swoop into the U.S. market with a small initial purchase in a land and expand move. The company doesn’t have a lot of money at risk here by entering a highly-competitive market with taking out a potential competitor when entering the market with their own brand.

Unfortunately for investors, the stock has soared off the $5.30 lows prior to the FQ3 earnings report. Aurora Cannabis is now up to $17.40. With 109 million shares heading into the this deal and ~112 million after the stock deal, Aurora Cannabis now suddenly has a market cap of $1.95 billion.

Aurora Cannabis still has a ton of cost cuts to implement while maintaining some moderate revenue growth in order to reach EBITDA positive in Q1’21. The company is still targeting reducing operating expenses to the C$45 million range while analysts have revenues growing sequentially in the next few quarters. Achieving this goal isn’t a guarantee as the company cuts operating expenses by 50% over the course of a few months. Most companies run into unexpected hiccups when eliminating employees.

The Canadian cannabis stocks are generally more expensive than the U.S. multi-state operators. Both Aurora Cannabis and Canopy Growth (CGC) trade around an EV/S multiple of 6x while the U.S. MSOs of Curaleaf (OTCPK:CURLF) and Trulieve Cannabis (OTCQX:TCNNF) trade at half the multiples at below 3x.

Data by YCharts

Aurora Cannabis is still working toward an aggressive goal of cutting a C$50.9 million EBITDA loss from the March quarter into positive EBITDA in the September quarter. Curaleaf just printed a March quarter with a $20.0 million EBITDA profit while Trulieve Cannabis generated an impressive $49.4 million EBITDA profit.

The drastic differences in the profit pictures favor the MSOs after the rally in Aurora Cannabis. The Canadian cannabis company is improving, but the market has become too bullish on the turnaround and the move into the competitive U.S. CBD sector.

Takeaway

The key investor takeaway is that Aurora Cannabis is making smarter corporate moves in 2020, but the stock tripling off the bottom begs for a pullback. The stock is expensive relative to other cannabis stocks over $17 here.

Investors wanting to play the turnaround in Aurora Cannabis should wait for a dip back to $10 where better value will emerge and the risks reflect the difficulty of the Canadian cannabis company achieving EBITDA positive numbers.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.