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Australis Capital poised to take advantage of rapidly growing US cannabis market

Snapshot

Australis invests in the highly fragmented, rapidly evolving US cannabis space, with a focus on building companies through early stage, diversified and opportunistic investments

cannabis us dollar

Quick facts: Australis Capital Inc

Price: 0.45 CAD

CSE:AUSA
Market: CSE
Market Cap: $75.34 m
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  • Focused on building companies through early-stage, opportunistic, and diversified investments in cannabis space
  • Spun off from Aurora in late 2018
  • Aims to establish a foothold in the US before US federal legalization shifts

What Australis Capital does:

Australis Capital Inc (CSE:AUSA) (OTCMKTS:AUSAF) aims to build companies through early-stage, opportunistic, and diversified investments in the cannabis value chain in the US and abroad.

Australis was spun out from cannabis behemoth Aurora Cannabis Inc (TSE:ACB) (NYSE:ACB) in September 2018 as its US investment vehicle. Despite boasting a C$9.2 billion market cap, Aurora is not allowed to invest in US cannabis assets due to Toronto Stock Exchange and NYSE listing rules. Australis is therefore Aurora’s arm to establish a foothold in the US, before a potential US federal legalization shift.

Whereas Aurora is headquartered in Canada and has global assets, Australis’s US headquarters reflect its strategic focus on the burgeoning American marijuana industry.

The Nevada-headquartered firm has ten assets in the cannabis industry, four of which are wholly owned. This includes brands, such as Body & Mind, Mr Natural and Green Therapeutics. In addition to this, the company has invested in cannabis tracking and loyalty app developer rthm and Wagner Dimas, which holds a number of patents for industrial-scaled pre-roll machines.

The firm has stringent investment criteria, with a focus on near and mid-term high-quality opportunities with strong return potential. It looks for companies that have intellectual property and strong, recognizable brands with a focus on control positions, as opposed to passive investments.

Australis acquired certain brands and cultivation assets of Nevada’s Green Therapeutics, including Tsunami, Provisions, and GT Flowers, as well as the right to assume and expand the construction of a 55,000 sq/ft cultivation and production facility in North Las Vegas, Nevada.

Australis also has a recently boosted 36% stake in Body and Mind (BaM), which operates a production operation in Nevada, as well as dispensaries in California and Ohio. BaM products include dried flower, edibles, topicals, extracts as well as GPEN Gio cartridges. BaM continues to expand operations in Nevada and Ohio and recently acquired a majority of ShowGrow and rights in its dispensaries in Long Beach and San Diego, California.

How is it doing:

Australis has had a busy few months, with a host of deals and more to come as it continues to expand its footprint. 

In October the firm was granted a special use permit by the city of Las Vegas that will enable it to transfer and consolidate licenses to the Nevada site.

It also announced it had formed a cloud-based, self-service fulfillment platform, Cocoon Technology LLC.

Cocoon, which will operate as a wholly-owned subsidiary of Australis, will provide dispensaries with a Platform-as-a-Service model to help them improve order fulfilment, cash management, bankcard acceptance, data analytics, customer loyalty, marketing, privacy, and compliance.

The company created CocoonPod, a self-service kiosk equipped with mobile applications, platform-agnostic integrations into business management systems and payment providers. The consumer-facing units can function as stand-alone kiosks or multi-unit pods.

On a financial level, the company has raised close to US$50 million in equity, has no debt, and has a healthy cash position of around US$30 million. Its market capitalization is estimated to be around US$185 million.

Inflection points:

  • Passage of SAFE Act through the US Senate
  • US Federal legalization of cannabis
  • Completion of organic cultivation and production facility in Las Vegas (expected in September 2020)

What the boss says:

In a recent interview with Proactive, CEO Scott Dowty talked about Australis’s exposure to the CBD market through its C$4 million investment in Folium Biosciences, a vertically integrated producer, manufacturer and distributor of hemp-derived CBD.

“We’re really excited about broadening our relationship with Folium Biosciences,” Dowty said. “It’s a very collaborative relationship and over time you’ll see that Australis and Folium forge an even stronger relationship on the CBD side.

“At the end of the day it’s all about driving shareholder value and I think we’re doing all the right things to get us there.”

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

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Full interview: Australis Capital merges Fintech and Cannabis with the...

Australis Capital (CSE:AUSA-OTCMKTS: AUSAF) CEO Scott Dowty sat down with Steve Darling from Proactive Investors to discuss the company making it easier for consumers with their cloud-based self-fulfillment platform for dispensaries using cocoon technology.  Dowty also told Proactive...

on 30/10/19

4 min read