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Aurora (TSX:ACB) Stock: Announces New R&D Partnership

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Aurora Cannabis (TSX:ACB)(NYSE:ACB) and UFC, a global mixed martial arts organization, announced a new research and development partnership on Wednesday. The two organizations will co-sponsor a clinical research program to explore uses for hemp-derived CBD.

The UFC is interested in effective topical CBD treatments for MMA athletes suffering from pain and inflammation. The two companies plan on marketing and distributing the new products under the ROAR sports brand and will be the “Official CBD product of the UFC.” UFC will conduct the research at the UFC Performance Institute in Las Vegas.

Using active UFC athletes on a strictly voluntary basis, the study will help establish peer-reviewed, publishable research in this area. Products will be developed in full compliance with U.S. federal law and with UFC’s anti-doping program, which adheres to WADA and USADA regulations.

The UFC partnership will fill critical gaps in hemp-derived CBD research and expand Aurora’s U.S. operations.

UFC

UFC produces the largest, global Pay-Per-View and live mixed martial arts events in the world. The organization generates revenue from a subscription-based service delivering for combat sport entertainment, including exclusive live events and on-demand content.

While federal and local governments may be establishing more lenient laws surrounding marijuana use and distribution, the U.S. Anti-Doping Agency currently governs UFC rules on marijuana use. Because marijuana can cause negative effects on the respiratory and cardiac health of the athlete, the USADA prohibits athletes from using cannabis. Nonetheless, the UFC is working to develop USADA-approved topical cannabis applications, which pose no danger to an athlete’s wellbeing.

Aurora Cannabis

Aurora Cannabis is one of the largest global medical marijuana companies on the Toronto Stock Exchange. The company has quickly developed its supply chain and export base to 24 countries and five continents. Aurora designs and cultivates cannabis from state-of-the-art genetics research.

In addition to the UFC partnership, Aurora has also established relationships with major medical cannabis research and product development companies, including Hempco Food and Fiber, Cann Group, and High Tide. The company’s growth strategy encompassed strategic international mergers and acquisitions including Aurora Deutschland and MED Colombia.

Investors should ignore Aurora’s poor stock price performance on the Toronto Stock Exchange. Although shareholders lost almost 50% last year on the exchange, cannabis stocks have been subject to extreme volatility as inexperienced and day traders have subjected the industry to speculation. Aurora has the potential to become one of the most profitable cannabis companies in the world.

The company is already exporting to pharmacies in Germany, Brazil, Italy, and Australia as part of private and government contracts.

Foolish takeaway

Aurora Cannabis is quickly developing a reputation for aggressively expanding by way of strategic partnerships and acquisitions. Canopy Growth seems to struggle to keep up with Aurora on the partnership front.

Topical medical cannabis and other non-intoxicating applications of the drug are a key market to reach demographics who are uninterested in the cognitive side-effects. As the marijuana industry take off globally, investors should watch Aurora’s CBD research for tomorrow’s next hot products.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Debra Ray has no position in any of the stocks mentioned.

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