Aurora Cannabis

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search
Aurora Cannabis Inc.
Public
Traded asTSXACB
IndustryCannabis
Founded2006 (2006)
FounderTerry Booth, Steve Dobler, Chris Mayerson, Dale Lesack
Headquarters,
Area served
Canada, Europe, Australia
RevenueIncrease C$ 248 million (June 2019)[1]
Decrease C$ -297 million (2019)[1]
Decrease C$ -291 million (2019)[1]
Total assetsIncrease C$ 5.5 billion (2019)[1]
Total equityIncrease C$ 4.4 billion (2019)[1]
Number of employees
1600
SubsidiariesPedanios GmbH, Urban Cultivator, Australis Capital Inc., CanvasRx Inc., H2 Biopharma Inc., Peloton Pharmaceuticals Inc., Aurora Larssen Projects Ltd., Larssen Ltd., Aurora Cannabis Enterprises Inc., BC Northern Lights Enterprises Ltd., Medreleaf (Australia)
Websitewww.auroramj.com

Aurora Cannabis Inc. is a Canadian licensed cannabis producer, headquartered in Edmonton. It trades on the Toronto Stock Exchange and New York Stock Exchange as ACB.[2] As of late September 2018, Aurora Cannabis had eight licensed production facilities, five sales licences, and operations in 25 countries.[1] It had a funded capacity of over 625,000 kilograms of cannabis production per annum with the bulk of capacity based in Canada and a growing presence in international markets, particularly Denmark and Latin America.[3] Aurora is the second largest cannabis company in the world by market capitalization, after Canopy Growth Corporation.[4] The company began trading on the NYSE on October 23rd, 2018 using the ticker ACB.[5][6]

After significant expansion in 2018, the company reduced expenses in the second half of 2019 when the Canadian recreational cannabis market had low sales due to excessive inventory and uncompetitive pricing with the black market.[7]

History[edit]

Aurora was founded in 2006 by Terry Booth, Steve Dobler, Dale Lesack and Chris Mayerson. Booth and Dobler collectively invested over $5 million of their own capital. The founding group secured a 160+ acre parcel of land in Mountain View County, Alberta, where they established Aurora's first facility. The company received its license to grow cannabis in 2014, making it the first cannabis producer to obtain a federal license in that province.[8] They decided to establish the company in Alberta due to comparatively low corporate tax rates and an ideal farm credit program.[9] On November 27, 2014, Health Canada issued Aurora's first license to sell medical cannabis. Since then they have built, and are operating, numerous growing facilities throughout Canada, Europe, Asia, Latin America and Oceania.[9] On January 10, 2017, Aurora received a license from Health Canada to sell cannabis oils, having been granted a license to produce the oils in February 2016.[10] Sales of four product lines of cannabis oils commenced in April, 2017.

After legalization in Canada - October 2018[edit]

Canada legalized the retail sale of cannabis nationally on October 17, 2018.[11] Due to its significant capital investments, particularly in large growing facilities, Aurora had about 20% of the Canadian retail market for cannabis during early 2019.[12]

At its year-end in June 2019, Aurora had a market capitalization of US$4.8 billion.[1] An October 2019 report stated that cannabis stocks had "crumbled to their lowest level since 2017"; Aurora shares were also at a two year low.[13][14] The fall in stock price for Aurora and other Canadian cannabis stocks in late 2019 was attributed to the missed benchmark revenues, general lack of profitability in the industry, slow rollout of retail stores in Canada, rise in vaping-related illnesses, non-competitiveness of pricing with black market cannabis, oversupply of commercial cannabis, termination of capital expenditures, and an FDA warning that cannabidiol may cause liver injury, among others.[15][16][17][18]

Public trading and acquisitions[edit]

Aurora became a publicly traded company on the Toronto Stock Exchange on July 24, 2017,[19] and on the New York Stock Exchange on October 23, 2018.[20]

Aurora grew through several acquisitions. By 2018, Aurora's subsidiaries included Pedanios GmbH (Germany's largest distributor of cannabis to pharmacies),[21] CanvasRx (the largest medical cannabis patient outreach service in Canada),[22] BC Northern Lights (an indoor growing supplies manufacturer),[23] Aurora-Larssen Projects (a globally leading greenhouse engineering and design consultancy),[24] and H2 Biopharma (a late-stage ACMPR applicant in Quebec)[25]

By April 2018, the company had a market value of C$4.5 billion; revenue in 2017 totaled C$31.1 million.[26] At the time, the company was concluding its takeover merger of previous competitor CanniMed Therapeutics. The takeover was finalized in January 2018, based on a C$1.1 billion deal. The subsequent plan to purchase MedReleaf was expected to make the company the largest in Canada with a market capitalization of approximately $7 billion.[27][28] Competitor Canopy Growth Corporation's market value exceeded that amount by $3.7 billion, however after a partial takeover by Constellation Brands was announced in late August 2018.[29] By 24 September 2018, however, Tilray Inc., a portfolio company of Seattle-based Privateer Holdings, with growing facilities in Nanaimo, BC, had become the world's second most valuable cannabis company with a market capitalization of about US$10 billion.

A report in mid-September 2018 by BNN Bloomberg, stated that Coca-Cola was considering the development of cannabis-infused beverages for medical purposes (with a non-psychoactive ingredient, CBD) and was in preliminary discussion with Aurora. Although Coke and Aurora then announced that they were merely studying the market, and had no plan to announce regarding the distribution of such products.[30] Aurora's shares increased and its market cap reached US$10.71 billion on September 18, 2018.[31] On 20 September 2018, Tilray Inc., a portfolio company of Seattle-based Privateer Holdings, with growing facilities in Nanaimo, BC, had become the world's most valuable cannabis company, but a major drop in share price (and a subsequent market capitalization of about US$10 billion) made it only the third largest, after Canopy Growth and Aurora.[32]

Class action lawsuits in the United States[edit]

During the fourth quarter of 2019, several law firms in the United States announced class action lawsuits against Aurora, citing the abrupt decline in stock price, failure to complete planned capital investments, and missed revenue and profit forecasts by the company as misleading to public investors.[15][33]

Status at end of 2019[edit]

During an interview in November 2019, CEO Terry Booth discussed the poor retail performance of the Canadian cannabis industry, saying that "carnage" was possible unless certain producers were able to reduce the cost of operations when oversupply existed.[34] In December, two of Aurora's senior executives departed the company: Chief Global Business Development Officer, Neil Belot,[35] and Chief Corporate Officer, Cam Battley,[7] when the price of the company's stock had dropped 61% over 2019.[36] During the fourth quarter of 2019, the company had suspended cannabis production in Denmark and at its greenhouses in Medicine Hat, Alberta.[37] The company's 15,000-square-foot, non-operational, greenhouse in Exeter, Ontario was also listed for sale. This was part of the goal to "reduce its expenses and boost its cash balance after a series of weak quarters," according to a news report.[38]

Aurora claimed it had reduced the cost of producing cannabis to $0.85 per gram, when the national retail price of cannabis in Canada was $7.37 per gram.[39]

In December, Aurora announced its release of products for "Cannabis 2.0" – the retail market for edible cannabis products – to include gummies, chocolates, baked goods, and mints.[36][40]

Earlier acquisitions and growth[edit]

Aurora owns Pedanios GmbH, a wholesale importer, exporter, and distributor of medical cannabis in the European Union, based in Berlin, Germany. Pedanios is the EU's largest distributor of cannabis by volume of product sold. As of March 2018, it is one of three distributors to offer cannabis flowers sourced from both Canada and the Netherlands.[41]

In January, 2018, Aurora became the first private company to be granted a supply agreement to the Italian market through its German subsidiary Pedanios. Aurora announced on January 23, 2018 that the first tender would consist of three lots of different cannabinoid profiles totalling 100 kg.[42]

A statement from the company in early October 2019 reported a funding capacity for over 625,000 kg of cannabis per year, with sales and operations in 25 countries.[43] Weeks later however, the company was reported to be having cash flow problems and the value of its stock had dropped significantly.[7][34]

CanniMed takeover[edit]

On November 13, 2017, Aurora Cannabis delivered an all-stock takeover bid to CanniMed Therapeutics's board of directors, which became public on November 14.[44] It claimed that it had the support of 38% of shareholders.[44] CanniMed management responded by rejecting the offer, and proposed an alternative merger with Newstrike Resources, a recreational cannabis firm, instead.[45] CanniMed also enacted a "poison pill" to fend off the acquisition by enacting a rights plan that would allow CanniMed shareholders to vote on the Newstrike deal. On November 20, Aurora launched a hostile takeover bid for CanniMed, conditional on shareholders rejecting the Newstrike deal.

The Ontario Securities Commission intervened in this, the first major hostile takeover bid in Canada's cannabis industry, ordering Aurora Cannabis Inc. to provide more disclosure regarding any ties to individuals "in a special relationship" with target CanniMed Therapeutics Inc. and blocking CanniMed from adopting the so-called "poison pill" defence. The ties were deemed unfounded by the Securities Commission. On January 17, 2018, Newstrike shareholders approved the proposed merger.[46] On January 18, CanniMed postponed its shareholder vote on the Newstrike deal, submitting that it will hold talks with suitor Aurora Cannabis.[47] On January 24, it was announced that Aurora Cannabis finally hammered out a deal to acquire CanniMed Therapeutics Inc. for $1.1 billion, and CanniMed dropped its plans to acquire Newstrike.[48]

In March 2018, Aurora completed their acquisition of Cannimed, with both parties agreeing to the transaction on friendly terms. This agreement brought Aurora's total patient count to 42,000 registered cannabis patients in Canada.

MedReleaf takeover[edit]

In mid-May 2018, the company announced a planned friendly takeover of MedReleaf in a $3.2 billion stock deal already approved by the directors of both companies. The deal still requires approval by shareholders and government regulators.[49] After the takeover is completed, the company will be able to produce 570,000 kilograms of cannabis at its nine grow operations in Canada and two in Denmark, if it uses all of the available capacity.[50] The value of the new company could be as high as $7 billion, making it substantially larger than Canopy Growth Corporation with its market cap of $6.45 billion.[28][51] It would have distribution agreements in a number of countries, including Germany, Italy, Brazil and Australia.[52] MedReleaf's German Partner filed damage claims against Aurora and MedReleaf in October 2018 for breaching the exclusive supply 2 years supply agreement.[53] Cannamedical had sponsored MedReleaf's Markham EU-GMP certification and played a decisive role in the successful completion.[54]

Growing facilities[edit]

Aurora Cannabis green house and Headquarters at Edmonton International Airport

Aurora has three operational facilities in Canada (Aurora Sky, Aurora Vie, and Aurora Mountain) plus two new facilities projected to be operational by the end of 2019, including a 1,000,000 square foot facility under construction in Odense, Denmark. Construction on the Nordic 2 project in Denmark was stopped in November 2019 when the company's stock dropped to a two year low. The Aurora Sun project in Alberta was put on a temporary hold. These decisions would lead to a savings of $190 million.[55]

Aurora Mountain was Aurora's first facility, completed in 2015. It is a 55,200-square-foot production facility in Mountain View County.[8]

Aurora Vie is a 40,000-square-foot, fully licensed, indoor production facility in Pointe-Claire, Quebec. It was the second licensed producer in Quebec, and was acquired in 2017 for $7 million when it was about 80% complete.[56]

In 2017, Aurora Cannabis began construction of an automated 800,000-square-foot plant in Alberta that it said would be capable of producing 100,000 kilograms of cannabis annually.[57] The land is part of the acreage owned by the Edmonton International Airport.

Testing[edit]

All products are third-party laboratory tested with results displayed on the company's website and mobile app. In March 2017, Aurora allowed public access to a simplified Certificate of Analysis (CoA) for every cannabis product available for sale on the company's online store and mobile app. The system was developed in partnership with Anandia Labs Inc., a Canadian cannabis genetics and testing laboratory.

Retail[edit]

As of April 2019, Aurora had about 17 retail outlets in western Canada through its strategic partnership with Choom Holdings Inc. and acquisition of Clarity Cannabis Retail Stores, with 52 more store locations in development.[58] In November 2019, Aurora opened an 11,000 square foot (1,022 square meters) flagship retail store in West Edmonton Mall, making the store the largest cannabis retail space in Canada.[59]

References[edit]

  1. ^ a b c d e f g "Aurora Cannabis Inc". TMX Money. QuoteMedia. Retrieved 30 November 2019.
  2. ^ "Justin Trudeau Makes a Surprising Case For Legalizing Marijuana". Time. Retrieved 2018-01-26.
  3. ^ "Aurora Cannabis Inc. |". Retrieved 2019-08-15.
  4. ^ Sean Williams (29 April 2019). "Meet Marijuana's 14 Billion-Dollar Pot Stocks". Motley Fool. Retrieved 27 November 2019.
  5. ^ "What's Ahead For Aurora Cannabis After An Impressive FY 2018". Forbes. 26 September 2018.
  6. ^ "Aurora Cannabis Inc". TSX Inc. Retrieved 18 September 2018.
  7. ^ a b c "Aurora stock still sliding as it reveals executive Battley was asked to leave". The Toronto Star. The Canadian Press. 24 December 2019. Retrieved 26 December 2019.
  8. ^ a b "This small Alberta village could soon be home to the world's largest marijuana factory | CBC News". CBC. Retrieved 2018-05-15.
  9. ^ a b "Why impending legalization is fracturing the marijuana industryAlberta Venture". albertaventure.com. Archived from the original on 2018-06-15. Retrieved 2018-06-26.
  10. ^ "Aurora Cannabis's license to sell oils is an important milestone, says Canaccord Genuity". Cantech Letter. 2017-01-25. Retrieved 2018-05-15.
  11. ^ Sapra, Bani (20 June 2018). "Canada becomes second nation in the world to legalize marijuana". CNN.
  12. ^ Kevin Kelleher (11 February 2019). "Aurora Cannabis Earnings Reveal More Money, More Problems for Recreational Pot Sales". Fortune. Retrieved 30 November 2019.
  13. ^ "Cannabis stocks crumble to 2017 lows after Hexo becomes latest to lower earnings expectations". Financial Post. 10 October 2019. Retrieved 16 November 2019. Tilray fell as much 12 per cent, heading for a record low. Canopy slid 9.7 per cent, Aurora lost 5.9 per cent and Cronos Group Inc. fell 6.7 per cent.
  14. ^ "Aurora shares sink on weak results and halting construction of cannabis plants". Guelph Today, Canadian Press. 15 November 2019. Retrieved 16 November 2019.
  15. ^ a b Kevin LaCroix (25 November 2019). "A Rash of Cannabis-Related Securities Class Action Lawsuits". The D&O Diary. Retrieved 30 November 2019.
  16. ^ Jason MacLean (25 October 2019). "Aurora Cannabis is starting to look attractive, this investor says". CannTech Letter. Retrieved 30 November 2019.
  17. ^ Ross Marowits (15 November 2019). "Aurora halts construction of two cannabis facilities to conserve cash". CTV News. The Canadian Press. Retrieved 30 November 2019.
  18. ^ Ciara Linnane (30 November 2019). "Cannabis stocks rocked as FDA warning undermines case for CBD investments". MarketWatch. Retrieved 30 November 2019.
  19. ^ "Aurora Cannabis Starts Trading on Toronto Stock Exchange". Cision. 21 July 2017. Retrieved 30 November 2019.
  20. ^ Tony Owusu (23 October 2018). "Pot Company Aurora Cannabis Sinks in Its NYSE Debut". The Street. Retrieved 30 November 2019.
  21. ^ "Aurora Cannabis ships medical marijuana to Germany to offset European supply shortage". Edmonton Journal. 2017-09-19. Retrieved 2018-01-26.
  22. ^ "Aurora Cannabis Closes $23 Million Financing and Signs Definitive Agreement to Acquire CanvasRx". www.canadianinsider.com. Retrieved 2018-01-26.
  23. ^ GmbH, finanzen.net. "Aurora Cannabis Acquires BC Northern Lights and Urban Cultivator". markets.businessinsider.com. Retrieved 2018-01-26.
  24. ^ "Aurora Cannabis to buy greenhouse design firm Larssen, terms not disclosed". CTVNews. 2017-11-23. Retrieved 2018-01-26.
  25. ^ "Aurora Cannabis Completes Larssen and H2 Biopharma Acquisitions". Markets.businessinsider.com. Retrieved 2018-01-26.
  26. ^ Murphy, Mike. "Getting too high? Canadian marijuana stocks skyrocket, raising bubble fears". Marketwatch.com. Retrieved 21 May 2018.
  27. ^ Ligaya, Armina (14 May 2018). "Aurora Cannabis to buy MedReleaf in all-stock deal worth $3.2 billion". Ctvnews.ca. Retrieved 21 May 2018.
  28. ^ a b "Aurora buys MedReleaf to cement status as world's biggest cannabis company". Cbc.ca. Retrieved 21 May 2018.
  29. ^ "With $5-billion Constellation deal, Canopy Growth is emerging as the Google of pot". Financial Post. Retrieved 23 August 2018.
  30. ^ Christina Pellegrini. "Aurora says there isn't a deal with Coca-Cola on marijuana-based drinks". Globe and Mail. Retrieved 18 September 2018.
  31. ^ CB:CNToronto Aurora Cannabis Inc
  32. ^ "Pot stock Tilray tumbles, completely wiping out gains from last week's wild surge". CNBC. September 24, 2018. Retrieved September 26, 2018.
  33. ^ Nivedha Elango (25 November 2019). "Aurora Cannabis Hit with Securities Lawsuits". 420 Investor Daily. Retrieved 30 November 2019.
  34. ^ a b David George-Cosh (29 November 2019). "Aurora CEO eyes U.S. amid looming 'carnage' for Canadian pot industry". BNN Bloomberg. Retrieved 26 December 2019.
  35. ^ Matt Lamers (23 December 2019). "Executives Belot and Battley exit struggling Aurora Cannabis". Marijuana Business Daily. Retrieved 26 December 2019.
  36. ^ a b Rajiv Nanjapla (24 December 2019). "Aurora Cannabis Releases Update on Cannabis 2.0". Market Realist. Retrieved 26 December 2019.
  37. ^ "Aurora shares sink on weak results and halting construction of cannabis plants". Guelph Today, Canadian Press. 15 November 2019. Retrieved 16 November 2019.
  38. ^ "Aurora Cannabis is selling one of its biggest greenhouses to raise cash — and analysts are applauding". Financial Post. 7 January 2020. Retrieved 8 January 2020. MKM Partners analyst says he expects $2-billion worth of writedowns
  39. ^ "Pot price in Canada falls 6.4 per cent to $7.37 a gram: StatCan". CTV News. The Canadian Press. 9 October 2019. Retrieved 26 December 2019.
  40. ^ "Aurora Cannabis Announces First Quarter 2020 Results & Corporate Action Plan". Cision. Aurora Cannabis Inc. 14 November 2019. Retrieved 26 December 2019.
  41. ^ GmbH, finanzen.net. "Aurora Cannabis and its Subsidiary Pedanios GmbH Both Receive EU GMP Certification | Markets Insider". markets.businessinsider.com. Retrieved 2018-06-26.
  42. ^ "Alberta medical marijuana supplier expands sales to Italy | CBC News". CBC. Retrieved 2018-06-26.
  43. ^ "Aurora Cannabis Provides Update on Global Operations and Growth Initiatives". Cision. Aurora Cannabis Inc. 3 October 2019.
  44. ^ a b "CanniMed tells shareholders to wait while it reviews Aurora offer". CBC News. Retrieved 2018-01-23.
  45. ^ "Aurora takeover bid 'makes no sense,' based on inflated share price: CanniMed". CBC News. Retrieved 2018-01-23.
  46. ^ Editorial, Reuters. "Up Cannabis-parent Newstrike's shareholders approve sale to CanniMed". CA. Retrieved 2018-01-23.
  47. ^ "CanniMed postpones shareholder vote, will hold talks with suitor Aurora Cannabis". business.financialpost.com. Retrieved 2018-01-19.
  48. ^ "'Nobody got any sleep': Aurora Cannabis lands CanniMed after marathon talks". business.financialpost.com. Retrieved 2018-01-25.
  49. ^ Ligaya, Armina (14 May 2018). "Aurora Cannabis to buy MedReleaf in all-stock deal worth $3.2 billion". Ctybews.ca. Retrieved 21 May 2018.
  50. ^ "Canopy Growth's position as top global cannabis company shaken by merger of two rivals". Ottawacitizen.com. 15 May 2018. Retrieved 21 May 2018.
  51. ^ "'Our eyes are on the global market': Aurora acquires MedReleaf in largest cannabis deal yet". Business.financialpost.com. 14 May 2018. Retrieved 21 May 2018.
  52. ^ "Edmonton's Aurora Cannabis buys MedReleaf for $3.2-billion, becoming 'largest cannabis producer in the world'". Thestar.com. Retrieved 21 May 2018.
  53. ^ "Failed Deliveries Could Cost Canadian LPs €14.7 Million". Leafly.com. 8 Nov 2018. Retrieved 12 May 2019.
  54. ^ "MedReleaf receives EU GMP certification for shipment from its Markham facility and completes first export to Cannamedical Pharma in Germany". Newswire.com. 11 July 2018. Retrieved 21 May 2019.
  55. ^ "Aurora shares sink on weak results and halting construction of cannabis plants". Guelph Today, Canadian Press. 15 November 2019. Retrieved 16 November 2019. Aurora announced after markets closed on Thursday that it will immediately cease construction of its Aurora Nordic 2 facility in Denmark to save about $80 million over the next year, as well as indefinitely defer completion of construction and commissioning at its Aurora Sun facility in Alberta to conserve $110 million.
  56. ^ "Aurora receives cultivation license for Pointe-Claire site". www.hortidaily.com. Archived from the original on 2018-01-20. Retrieved 2018-01-19.
  57. ^ "Aurora Sky rolls a big one". www.plant.ca. Retrieved 2018-01-19.
  58. ^ "The Top 5 Cannabis Retail Brands in Canada". Mugglehead Media Corp. Global News. 1 April 2019. Retrieved 27 November 2019.
  59. ^ Phil Heidenreich (26 November 2019). "Aurora Cannabis opening 11,000-square-foot store at West Edmonton Mall". Global News. Retrieved 27 November 2019.

External links[edit]