Aurora Cannabis Inc. plans to buy up to 40 percent of Liquor Stores Inc.

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      The B.C. government is not going to allow cannabis to be sold alongside liquor products.

      But that hasn't dissuaded one of the big players in Canada's weed business from making a significant investment in the booze business.

      Vancouver-based Aurora Cannabis Inc. announced today that it will spend $103.5 million on a private placement in Liquor Stores N.A. Ltd.

      This will give Aurora a 19.9 percent stake in the TSX-listed company that operates 231 retail liquor stores.

      "Liquor Stores intends to use the net proceeds from the Private Placement to establish and launch a leading brand of cannabis retail outlets, whereby it will convert some number of Liquor Stores' existing retail outlets into cannabis retail outlets and establish new cannabis retail outlets," Aurora said in a news release.

      Aurora also indicated that it hopes to invest another $34.5 million in Liquor Stores Inc. pending the approval of the latter company's shareholders. This would boost Aurora's holdings to 25 percent.

      In addition, Liquor Stores is offering Aurora two classes of share purchase warrants: 10.13 million that can be exercised at $15.75 per share and 1.75 million that can be xercised at $15 per share. This too requires the approval of Liquor Stores shareholders.

      If these warrants are exercised, it would eventually boost Aurora's stake in the company to 40 percent.

      Aurora is a wholly owned subsidiary of Aurora Cannabis Enterprises Inc, which is a licensed medical cannabis producer.

      It operates production facilities in Alberta and Quebec.

      Last month, the company announced a $1.1-billion friendly takeover of CanniMed Therapeutics.

      As of this writing, Aurora Cannabis shares are up 13 percent to $9.61 following news of the investment in Liquor Stores.

      But it's still off sharply from last month's peak of $14.79 on January 23.