Aurora to boost CBD supply chain with Hempco acquisition

Aurora Cannabis (NYSE:ACB) will acquire the remaining interest in Hempco Food and Fiber (TSX:HEMP-VN), which will allow the Canadian firm to expand its CBD production.

Aurora announced on April 16 that it will pay C$63.4 million (1 Canadian dollar is valued at $0.75 U.S.) for the 48 percent of Hempco that it currently does not own, valued at C$1.04 per share.

Hempco produces hemp-derived foods and consumer products. Importantly for Aurora, it will provide the company with economical access to high volumes of hemp to extract CBD. Hempco’s Nisku facility in Alberta will produce up to 6.4 million pounds when it opens.

“This transaction will enable us to fully integrate Hempco and its new Nisku processing facility into Aurora’s global hemp operations,” said Aurora CEO Terry Booth in a statement. “Our goal is to strengthen our CBD-from-hemp supply chain as well as our hemp business of hemp-based superfoods, nutraceuticals and fibers.”

The acquisition adds to Aurora’s existing hemp assets. It owns Agropro, Europe’s largest hemp producer and ICC in South America. It also will improve Aurora’s diversification outside of its core recreational and medical cannabis business.

CBD is a non-psychoactive compound found in cannabis touted for a variety of health benefits. Though the Agriculture Improvement Act of 2018 made hemp products legal in the United States, the status of CBD remains somewhat murky, even as products come to market.

Aurora has signaled that it will enter the U.S. market once there is a clear regulatory and legal framework in place for distributing and selling CBD.

“We’ll enter when it’s proper to enter, and when it’s legal to enter into the United States market,” Booth said during a call with analysts in February.