Aurora Cannabis 'more than ready' for pot legalization in Canada
Cannabis seedlings are shown at an Aurora Cannabis facility, Friday, November 24, 2017 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
Armina Ligaya, The Canadian Press
Published Tuesday, September 25, 2018 4:04PM EDT
TORONTO -- Licensed marijuana producer Aurora Cannabis Inc. says it is "unequivocally" ready for the legalization of recreational pot in Canada next month, with enough supply to meet all its commitments to provinces and territories.
Aurora's chief corporate officer Cam Battley adds that the cannabis firm doesn't foresee the need for supply agreements with other licensed producers to bridge inventory gaps.
"We've got all of our product categories ready," he told analysts on a conference call discussing its latest quarterly earnings on Tuesday.
"So, we're more than ready for consumer legalization. And more than that, our ramp-up in production is happening at exactly the right time. We're not going to be dumping old, stockpiled, stale product on the market."
Aurora's comments come as Canada prepares to legalize recreational cannabis for adult use on Oct. 17.
Executives of the Edmonton-based cannabis company would not disclose the current size of its inventory in kilograms, but said it has been ramping up its production capacity.
Aurora anticipates that by the end of 2018 it will be able to produce 150,000 kilograms per year.
The company has eight licensed production facilities, compared with one fully licensed facility and two under construction one year ago, Battley said.
Aurora has $88 million in proforma inventory and biological assets, including that of MedReleaf Corp., chief financial officer Glen Ibbott said. Aurora signed a $3.2-billion deal to acquire MedReleaf in May.
Aurora's latest quarterly earnings capped off a busy year with fourth-quarter revenues of $19.1 million, more than triple the $5.9 million in revenues it saw a year ago. For the full year, revenues increased to $55.2 million from $18.1 million in 2017.
Net income attributable to shareholders for the quarter was nearly $80 million, up from a $4.82 million loss a year ago.
The increase was primarily attributable to the unrealized non-cash gain on derivatives and marketable securities, which was partially offset by increased finance costs, share-based payments, acquisition and project evaluation costs.
Analyzing the performance of a marijuana company is tough because of accounting rules used in the agriculture industry that require companies to put a value on their pot plants before they are harvested, and approaches differ between producers on how to apply these guidelines.
Meanwhile, the company's operating expenses soared as the marijuana producer prepared for the impending domestic adult-use market on Oct. 17 and expanded its reach outside of Canada.
Aurora's general and administration costs increased to $22.6 million in the fourth-quarter, compared with $9.8 million in the previous quarter and $2 million in the same period a year ago. Sales and marketing costs also rose to $14.8 million, compared with $3.6 million in the same quarter a year ago.
The company said this increase was due to investments in its brand strategy including one-time activities in preparation for legalization, but also stemmed from the integration of Saskatoon-based licensed producer CanniMed, which Aurora acquired earlier this year.
Aurora also reiterated its plans to list Aurora on a "senior, U.S. exchange," subject to the appropriate approvals. This move, which the company had mentioned publicly earlier this year, comes after a wild ride for marijuana stocks in recent weeks.
"This listing provides access to a broader investor audience," Battley said.