Aurora Cannabis (ACB): Growth at Any Cost (to Shareholders)

The marijuana industry has had a truly phenomenal year. In Canada, nine decades of recreational marijuana prohibition came to an end on Oct. 17, thanks to the passage of the Cannabis Act in June. Having gained legitimacy, cannabis growers are ramping up capacity as quickly as they can to garner their piece of the multibillion-dollar marijuana market.

In the U.S., a handful of new states legalized cannabis in some capacity. Residents in Utah and Missouri gave the green light to medical marijuana initiatives in November, with Michigan and Vermont approving recreational weed in 2018. All told, 32 states now allow medical cannabis in some capacity, with 10 states having legalized adult-use pot.

The potential for marijuana stocks is enormous, and none may be more polarizing than Aurora Cannabis (NYSE:ACB)

Aurora Cannabis has been expanding like mad in 2018

When the year began, Aurora Cannabis was working on its flagship property, known as Aurora Sky. When complete, the 850,000-square-foot greenhouse was expected to be the most state of the art in the world, according to management, with around 100,000 kilograms of peak annual yield. When combined with existing assets (Aurora Mountain and Aurora Vie), the company looked to be on track for a little over 100,000 kilograms of peak annual production.

Then, Aurora Cannabis got hungry.

In addition to announcing a new organic project in Medicine Hat, Alberta, known as Aurora Sun, and partnering with Alfred Pedersen & Son in Denmark to retrofit vegetable-growing greenhouses for cannabis production, the company has made quite a few notable acquisitions.

In May, it finally closed on its $852 million purchase of Saskatchewan-based CanniMed Therapeutics. On top of added production capacity, CanniMed was working on a number of alternative weed products, including oils and softgel capsules. These alternative products generate significantly better margins than dried cannabis flower.

In July, Aurora Cannabis closed on a $2.5 billion acquisition of Ontario-based MedReleaf — the largest buyout to date in the marijuana space. MedReleaf had about 35,000 kilograms in combined annual capacity from its Markham and Bradford facilities, but purchased 164 acres of land in 2018, complete with the Exeter facility. This facility is being retrofitted for…

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