A cannabis producer recently announced plans to consolidate shares on a 1-for-10 basis, leading to a drop in shares. This move is part of a trend in the cannabis industry, but the implications for success are uncertain.
The primary concern for the company is maintaining its listing status, as shares currently trade below $1. By consolidating shares, the company aims to attract institutional investors and improve its financial standing. This consolidation, scheduled for February 20, is the second of its kind after a previous 1-for-12 consolidation in 2020.
While Aurora Cannabis has seen positive earnings through its Canadian and global medical markets, there is uncertainty around its future plans for expansion beyond cultivation and medical sales. This lack of clarity, combined with a history of share dilution, raises doubts about shareholder interests.
For investors seeking growth in the cannabis industry, another option to consider is Organigram Holdings. As the second-largest producer in Canada and a pure-play cannabis company, Organigram has attracted significant investments, including a partnership with British American Tobacco. With a focus on profitability and global operations, Organigram presents a more stable and promising investment opportunity compared to Aurora Cannabis.
