Growing pains at Aurora Cannabis

By midyear 2019, Aurora Cannabis was projected to be the largest producer of weed, when at full operating capacity. The company had 15 cultivation facilities that were expected to generate no less than 625,000 combined kilos of annual run-rate capacity by the end of its fiscal 2020 (June 30, 2020), with peak production potential of around 670,000 kilos. Such a huge annual haul of marijuana was expected to make Aurora a popular grower to forge supply deals with, as well as push its per-gram production costs well below the industry average.

But industry dynamics in Canada have coerced changes from growers both big and small. Ontario's inability to open a sufficient number of cannabis retail locations, and Health Canada delaying the launch of derivatives by two months, have hurt pot stock operating results and sent many growers into cash-conservation mode, including Aurora.

In recent months, Aurora Cannabis announced that it would be halting construction on its 1-million-square-foot Aurora Nordic 2 facility in Denmark, which was slated to produce at least 120,000 kilos per year, as well as its 1.62-million-square-foot Aurora Sun campus in Alberta. Only six grow rooms covering 238,000 square feet at Aurora Sun will remain in use for the time being. Aurora Sun was expected to produce at least 230,000 kilos annually at full capacity. These two construction halts essentially removed around 320,000 kilos of run-rate peak annual output.


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