Odor Complaints Make a Great Case for Buying ACB Stock

Aurora Cannabis (NYSE:ACB) has an odor issue, and it’s got nothing to do with ACB stock. It turns out that Aurora’s 800,000 square-foot Aurora Sky grow op in Edmonton, Alberta is adjacent to the city’s international airport.

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In December, in response to complaints from people working near and at the airport about smells emanating from the company’s facility, it sent an email to area businesses letting them know it was aware of the problem and working on solutions.

“One of the things that we’re doing at Aurora Sky is perfecting the technology of odor eradication. We’ve done of a good job of that thus far, because it’s a closed a system and we control air flow,” Aurora chief corporate officer Cam Battley said recently. “However, we have noticed that we still have a ways to go to perfect this technology, not just on behalf of ourselves, but on behalf of the industry.”

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Taking Care of Business

To eliminate the problem, Aurora’s added two new exhaust units to act as deodorizers for the 800,000 square-foot building. It also has added 800 HVAC filters for the processing areas, and more than 1,300 pocket filters in its grow bays. It’s also got misting machines and charcoal filtration units to reduce contaminants from the air.

According to Battley, the smell people are noticing isn’t going to harm them or impair them in any way.

“What people are smelling is not the cannabinoid — the active pharmaceutical ingredient in cannabis,” Battley said. “In fact, it’s the terpenes, the aromatic compound that gives each strain of cannabis its particular smell and taste.”

If you’re an ACB shareholder, you’ve got to consider this situation to be a win for the company. Here’s why.

Real Production

Cannabis investors operate in a bit of a vacuum. Those of us who write about ACB stock and all the other cannabis companies operating in Canada, the U.S., and the rest of the world, tend to throw out figures like candy.

Company A is capable of producing 300,000 kilograms of marijuana a year; Company B has more than three million square feet of production facilities; and, Company C produces cannabis for CAD$1.34-CAD$1.48 a gram. The list goes on.

We write these things as if they’re gospel because the company or analysts tell us it’s so. But how do we know if we’re not in the inner circle?

We don’t.

So, the fact Aurora’s having smell issues at its Aurora Sky facility is about as good a sign as you could find that the company is producing a whack of cannabis. Not to mention its experience in Edmonton will help it with its much bigger facility in Lethbridge, Alberta, which is 1.6 million square feet or double Aurora Sky.

If you own ACB stock, smell issues ought to be music to your ears, not something to be concerned about.

Watching ACB Stock

For some time now, my three favorite cannabis stocks have been Canopy Growth (NYSE:CGC), Cronos Group (NASDAQ:CRON) and Hexo (AMEX:HEXO). I won’t get into the reasons why in this article.

I will say that I’ve been somewhat skeptical about Aurora in the past. I looked upon CEO Terry Booth as a bit of a snake oil salesman.

Not even Cowen analyst Vivien Azer, the first Wall Street analyst to cover cannabis could move me off my perch with positive comments about Aurora:

“ACB is well positioned to benefit in the early innings of the Canadian adult use market, given its impressive 20% market share to date and #2 position by in-stock (stock keeping units), based on our analysis…In addition, the company’s large cultivation footprint, capable of producing over 575,000 kg, provides ACB with the necessary infrastructure to weather early storms in adult use while continuing to grow higher-value revenues in the medical market.”

As part of Azer’s note to clients, she made ACB Cowan’s number one cannabis stock, pushing Canopy Growth into second place.