Cann Group (ASX:CAN) shares dropped this morning after North American pot producer Aurora Cannabis (NYSE:ACB) sold out.

According to the last substantial holder notice issued in August, Aurora Cannabis held 31,956,347 shares. This represents an 11.84 per cent stake in the company and was worth $13.4 million on Friday.

But today Cann Group revealed Aurora had sold its stake via off-market trades to undisclosed buyers.

This morning’s announcement stated the decision was “consistent with Aurora’s current strategic priorities”. It came after Aurora told Cann Group at the start of this year it wouldn’t be participating in any further funding rounds.

Aurora was one of several companies that grew off the back of the hype that followed the legalisation of recreational cannabis in Canada in 2018.

In those days, there was even speculation it may have bought Cann Group outright.

Unfortunately the market became flooded and 2019 witnessed a correction during which Aurora was one of the biggest victims.

Aurora’s cash splash on a number of acquisitions and facilities left it further from profitability than it might have liked.

However, shareholders are hopeful it could benefit from Joe Biden’s plan to decriminalise marijuana in the US; evident in Aurora’s 10 per cent share price rise on the day after the vice-presidential debate in which Kamala Harris made the pledge.


No impact on Cann’s business plans

Cann said the decision had no impact on its business plans. It still intended to expand its manufacturing capacity and grow its supply base with B2B customers.

The stock was one of the first cannabis IPOs back in 2017, listing at 30 cents per share and raising $13.5 million. It subsequently undertook a $60 million capital raising just six months post-listing.

While it is well off the highs seen in 2018 it is still above its IPO price.

Cann Group is a dominant grower in Australia right now with a base in Mildura, Victoria which Aurora had designed.

The company holds licenses to import, grow, produce and manufacture and export cannabis products.

It has two export agreements with European and UK partners for medicinal cannabis formulated oil and dried products made by IDT and is forecasting $15 million in revenue this financial year.

Shares in Cann Group fell 6 per cent this morning.