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What’s Auxly Cannabis’ MidStream Strategy in 2018?

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Dec. 21 2018, Updated 10:30 a.m. ET

Midstream strategy

Auxly Cannabis (CBWTF) competes with multiple players like Cara Therapeutics (CARA), GW Pharmaceuticals (GWPH), Insys Therapeutics (INSY), Aphria (APHA), Aurora Cannabis (ACB), and Canopy Growth (CGC) in areas like pharmaceutical, health and wellness, vertical integration, and adult use in the midstream segment.

According to Auxly Cannabis’ corporate presentation, the company expects margin compression for the cannabis flower in the long term. To counter this problem, the company is focusing on high-margin cannabis-based products like oils, processed products, and pharmaceutical or natural health products through Dosecann Cannabis Solutions.

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Dosecann updates

Health Canada granted a dealer’s license for Controlled Drugs and Substances to the company’s wholly-owned subsidiary, Dosecann, in mid-July. The license allowed Dosecann to engage in various manufacturing and research activities related to cannabis-based products.

By the end of July, Dosecann managed to secure all of the approvals for its facility in Prince Edward Island, Canada. In September, the company started commercial activities at the 42,000 square foot facility related to cannabis-based products for medical use and as consumer packaged goods. Auxly Cannabis planned to start expanding the cultivation facility in the fourth quarter.

KGK Science acquisition

On August 31, Auxly Cannabis issued a press release announcing the completion of the acquisition of KGK Science for a total consideration of $12.3 million. According to Auxly Cannabis’ corporate presentation, KGK Science provides clinical research services, regulatory compliance solutions, participant recruitment services, research support services, and other consulting services, to consumer packaged goods, nutraceutical, and natural health product companies.

Next, we’ll discuss Auxly Cannabis’ financial projections.

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