Aurora Cannabis Archives - Green Market Report

StaffMarch 10, 2021
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4min3160

Aurora Cannabis Inc.  (NYSE: ACB) has filed a new preliminary short form base shelf prospectus to offer up to $1 billion in securities. The company said that the shelf includes common shares, preferred shares, warrants, subscription receipts and debt securities and will be effective for a 25-month period. Management said that it believes the filing of this new Base Shelf Prospectus is in the best interest of shareholders and provides maximum flexibility to pursue strategic initiatives, which may include acquisitions or partnerships pursuant to the company’s previously stated global growth strategy.

The stock fell over 4% on the news and was closed at $9.85. Shares have dropped by 17% over the past 12 months.

In October of 2020, Aurora filed an offering to raise $500 million. At that time, Aurora already had over 120 million shares outstanding and 19% of those shares were shorted – meaning those traders are betting the price per share will fall. As of February only 10% of the shares are shorted. With the completion of the previously filed ATM program, Aurora said it currently has available cash resources of approximately $272 million, in addition to an undrawn revolver capacity of approximately $11 million.

On January 26, 2021Aurora closed its bought deal public offering of units for total gross proceeds of $137.9 million. The company sold 13,200,000 units at a price of US$10.45 per Unit, including 1,200,000 Units sold pursuant to the exercise in full of the underwriters’ over-allotment option.

Martin added, “To further support this strategy, we have also focused on improving our cash burn, margins, and overall financial flexibility. To that point, our year over year cash use has decreased by 74% to $70.5 million, our normalized margins remain solid particularly in medical, and our recently amended credit facility gives Aurora much-improved optionality as opportunities arise. Combined with $565 million in cash on our balance sheet today, Aurora will continue to be a long-term player in the global cannabinoid market and increasingly positioned to deliver for shareholders over the long run.”

In February,  Aurora said that the total and cannabis net revenue before provisions was $70.3 million, an 11% increase over last year’s second quarter and a 2.5% sequential increase. After accounting for return and price provisions, the quarter’s total cannabis net revenue was $67.7 million, a 28% increase in cannabis net revenue over the prior year’s second quarter. The company’s net loss, which wasn’t mentioned in the press release was $292 million dollars. The net loss per diluted share was $1.74. The cash balance as of February 10, 2021, was approximately $565 million.

 


Kaitlin DomangueMarch 4, 2021
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5min3450

It’s time for your Daily Hit of cannabis financial news for March 4th, 2021. 

On the Site

Columbia Care Guides Higher for 2021

Columbia Care Inc.  (OTCQX: CCHWF)  released preliminary results for the fourth quarter and full year ended December 31, 2020 and issued 2021 guidance. Actual revenue rose 228% in the fourth quarter to $76 million versus $23 million for the same time period in 2019. 

While this is a solid performance, it does miss the analyst estimates for revenue of $79 million in the fourth quarter according to Yahoo Finance. The combined results for the fourth quarter are listed as $81 million. 

 

Cannabis Companies Go On Buying Spree

This week has been unusually active as cannabis companies have been on a major buying spree.

  • Schwazze acquires Star Buds for roughly $72.3 million
  • Greenlane acquires Eyce for an undisclosed amount
  • Terra Tech buys UMBRLA, Inc., recently rebranded as Unrivaled for an undisclosed amount

 

PACT Act to Apply to All Vaping Products

Amendments to the Prevent All Cigarette Trafficking (PACT) Act may have caused cannabis to hit yet another setback. The PACT Actt has been amended to include “electronic nicotine delivery systems”, which looks inclusive to cannabis at first glance. However, it’s described as followed:

“any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device including an e-cigarette; an e-hookah; an e-cigar; a vape pen; an advanced refillable personal vaporizer; an electronic pipe; and any component, liquid, part, or accessory of a device described without regard to whether the component, liquid, part, or accessory is sold separately from the device.”

This means that USPS can no longer deliver cannabis vape products to consumers. 

 

Delic Moves To Focus On At-Home Mushroom With Homestead Acquisition

Psychedelic media company Delic Holdings Inc. (OTCQB: DELCF) has acquired mushroom kit maker and media company Homestead brands in an all-stock deal. DELIC issued subordinate voting shares worth $50,000 and 50,000 incentive stock options were also granted to Homestead founder David Tatelman, with an exercise price of $0.58. David Tatelman will act as a consultant to the company.

 

Charlotte’s Web Moving Beyond Hemp

Well-known hemp CBD company Charlotte’s Web Holdings, Inc.  (OTCQX: CWBHF) is expanding beyond its current model with a planned acquisition of privately-held Stanley Brothers USA Holdings. Stanley Brothers is a cannabis wellness incubator currently operating in three states (Colorado, California, Florida) with expansion plans underway in eight additional states.

The acquisition though isn’t immediate. Instead, Charlotte’s Web is pursuing a five-year option plan valued at $8 million, which could be extended to seven years.

In Other News

Tryp Therapeutics Announces Application to List on OTCQB

Pharmaceutical company focused on identifying and developing clinical-stage compounds for diseases with complex and unmet medical care, announced today their application to list on the OTCQB® Venture Market OTCQB. 

 

Illinois Dispensaries See $2.88 Million in Daily Sales in February 

Illinois dispensaries sold almost $2.9 million dollars worth of cannabis last month, outpacing the record set just one month earlier. The state’s retail shops sold more than $80 dollars in adult-use cannabis last month, a slight drop from $88 million in February. 


Debra BorchardtFebruary 11, 2021
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5min4240

Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB) announced its financial and operational results for the second quarter of fiscal 2021 ending December 31, 2020. Aurora said that the total and cannabis net revenue before provisions was $70.3 million, an 11% increase over last year’s second quarter and a 2.5% sequential increase. After accounting for return and price provisions, the quarter’s total cannabis net revenue was $67.7 million, a 28% increase in cannabis net revenue over the prior year’s second quarter.

The company’s net loss, which wasn’t mentioned in the press release was $292 million dollars. The net loss per diluted share was $1.74. The cash balance as of February 10, 2021, was approximately $565 million.

“Aurora had an excellent second quarter, and I’m pleased that we’re advancing nicely against the plan we laid out in September of 2020,” stated Miguel Martin, Chief Executive Officer of Aurora Cannabis. “For the period, our core revenue strength in medical and consumer was complemented by initial rollouts in vape products and concentrates. Combined, these elements are part of the proven, regulated CPG strategy we’ve adopted. Adjusted EBITDA for the quarter, while vastly improved year over year, was impacted by several decisions that we believe will clear a path for our premium product focus and more variable cost model. We are confident that this will give Aurora maximum flexibility and position the organization to drive significant cashflow in the coming quarters.”

Consumer cannabis net revenue was $28.6 million ($31.1 million excluding provisions), a 25% increase from the prior year. Additionally, Aurora’s consumer cannabis derivative products net revenue increased by $1.7 million sequentially, driven by product launches in vapes, edibles, and concentrates. Medical cannabis net revenue was $38.9 million ($39 million excluding provisions), a 42% increase from the prior-year period. The increase was primarily attributable to a continued strong performance in both the international and Canadian medical businesses. International medical sales grew by 562% over the prior year’s comparative period.

SG&A, including Research and Development, was $44.4 million in the quarter, down $49.7 million or 53% from the prior-year period as a result of the company’s Business Transformation Plan. Included in SG&A and R&D in Q2 2021 is $2.1 million of costs related to restructuring charges and severance and benefit costs associated with the Business Transformation Plan. Excluding these impacts, Q2 2021 SG&A and R&D was $42.3 million.

On January 26, 2021, Aurora closed its bought deal public offering of units for total gross proceeds of $137.9 million. The company sold 13,200,000 units at a price of US$10.45 per Unit, including 1,200,000 Units sold pursuant to the exercise in full of the underwriters’ over-allotment option.

Martin added, “To further support this strategy, we have also focused on improving our cash burn, margins, and overall financial flexibility. To that point, our year over year cash use has decreased by 74% to $70.5 million, our normalized margins remain solid particularly in medical, and our recently amended credit facility gives Aurora much-improved optionality as opportunities arise. Combined with $565 million in cash on our balance sheet today, Aurora will continue to be a long-term player in the global cannabinoid market and increasingly positioned to deliver for shareholders over the long run.”

Allan Cleiren, Chief Operating Officer, has decided to retire from the company effective March 31, 2021.


Kaitlin DomangueNovember 9, 2020
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5min7830

Canadian-based cannabis company, Aurora Cannabis (NYSE: ACB) reported their Q1 earnings this morning. The results were mixed at best, with shares rising 21% on the potential for cannabis legalization under a Biden administration. Unless otherwise stated, these figures are in Canadian dollars. 

The company’s adjusted gross margin before fair value adjustments on total cannabis net revenue didn’t waver much quarter to quarter, with Aurora Cannabis reporting a 48% adjusted gross margin compared to 50% in Q4 2020. Before fair value adjustments, the company’s adjusted gross margin on cannabis net revenue was 52%. 

Consumer Cannabis 

Aurora reported a slight increase in total and net revenue in Q1, with numbers reaching $67.8 million. Q4’s revenue totaled $67.5 million, so while the increase was small, it was there. 

Consumer cannabis net revenue, however, was down 3% quarter over quarter, reaching a stop at $34.3 million. The adjusted gross margin before fair value adjustments on consumer cannabis net revenue was 38% compared to 35% in the prior quarter. Aurora cites sales mix shifting towards higher margin derivative products as the reason for this increase. 

One area where Aurora really shined in Q1 is in consumer cannabis extracts, with the net revenue increasing by $3.6 million sequentially. Aurora says this was driven by their focus on high-growth extracts such as vapes, edibles, and concentrates, plus a $1.1 million increase in US CBD. 

Medical Cannabis

The company reported a 4% sequential increase in medical cannabis net revenue, ultimately capping out at $33.5 million. Aurora primarily attributes this growth to their strong international medical cannabis presence, which grew a whopping 41% quarter over quarter. 

“Our Q1 2021 results are transitional but do highlight successes across a number of diverse profit pools,” said Miguel Martin, CEO of Aurora. “We remain the leader by revenue in the high-margin Canadian medical market, our international medical business experienced more than 40% net revenue growth this quarter, and our CBD brand Reliva is #1 ranked by Nielsen in the U.S. CBD sector.”

The adjusted gross margin on medical cannabis before fair value adjustments was 59% versus 67% in the prior quarter. This is excluding $2.6 million in ramp up costs at Aurora Nordic 1, which is a large cannabis facility located in Denmark. 

EBITDA

Aurora’s adjusted EBITDA loss was $57.9 million in Q1, with the company including restructuring payments such as contract and employee termination costs of $47.4 million. Excluding these impacts, the adjusted EBITDA loss as defined under the term credit facility is $10.5 million. Aurora says they remain on track to achieve a positive adjusted EBITDA next quarter. 

Cash Use

Aurora Cannabis used $25.2 million cash in Q1 to fund company operations, and used $47.4 million for contract and employee termination costs. This is similar to the prior quarter, however, the use of cash showed significant progress. Cash used to pay for capital expenditures in the first quarter was $15 million compared to $32 million in the prior quarter, as many of their projects are now wrapping up and completing. 

Increased net working capital used $37.0 million in the quarter, driven by a $13.8 million increase in accounts receivable and a $25.1 million increase in inventory.

“While we are not satisfied with our past performance in the growing Canadian consumer business, we have a sense of urgency in the execution of our tactical plan to grow profitable market share. Our efforts are directed at delivering the highest quality products, refocusing on our leading premium and ultra-premium brands, better allocating our sales and marketing spend, and executing key account partnerships at both the province and retail levels.”


StaffOctober 30, 2020
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3min7230
Aurora Cannabis Inc.  (NYSE: ACB) officially filed its final short form base shelf prospectus and suggested that its revenue will be at the high end of the previous guidance. The company said that following the divestiture of non-core subsidiaries during fiscal 2020, net revenue for the three months ending September 30, 2020, is expected to be comprised almost entirely of cannabis net revenue and expected to be at the high end of our previously announced $60 million to $64 million range.

This is still a sequential decline from the $67.5 million in the fourth quarter, which declined 3% from the prior quarter. The company has continued to see its revenues fall.

Aurora stock was falling over 4% to lately sell at $3.92. It’s a far cry from the 52-week high of $47. The new offering, which could deliver as much as 100 million new shares, will dilute the current shares. Aurora Cannabis already had over 120 million shares outstanding and 19% of those shares are shorted – meaning those traders are betting the price per share will fall.

Aurora also said it expects adjusted gross margin before fair value adjustments on cannabis net revenue to be at the high end of its previously announced 46%-50% range. SG&A costs (including R&D) for the three months ended September 30, 2020, are expected to be in the low $40 million range after excluding certain one-time contract and employee termination costs. Aurora continues to expect to achieve positive adjusted EBITDA in the second quarter of fiscal 2021.

The filing of the shelf prospectus is expected to provide financial flexibility to execute against previously stated business objectives. The company expects to be in full compliance with all financial covenants as of September 30, 2020, under our amended and restated credit facility. Aurora’s relationship with the lending syndicate remains strong and there are no new obligations to repay any portion of the credit facility until its stated maturity date.

 


Debra BorchardtOctober 27, 2020
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4min6370

Canadian cannabis company Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB) announced it has completed the previously filed At-The-Market program. In addition to that, it has filed a new preliminary short form base shelf prospectus with securities regulators in each of the provinces of Canada, except Quebec, and a corresponding shelf registration statement on Form F–10  with the United States Securities and Exchange Commission. This filing will allow Aurora to make offerings of up to $500 million of common shares, preferred shares, warrants, subscription receipts, and debt securities, or any combination thereof during the 25-month period that the base shelf prospectus remains effective.

Aurora cannabis already had over 120 million shares outstanding and 19% of those shares are shorted – meaning those traders are betting the price per share will fall. Shares were lately selling at $4.37 in early trading, but the price to sales according to Yahoo Finance is $2.14. This is a tremendous drop from the company’s year high of $47 and not far from the 52-week low of $3.93.

With the completion of the previously filed ATM program, Aurora said it currently has available cash resources of approximately $272 million, in addition to an undrawn revolver capacity of approximately $11 million.

Declining Revenues

Last month, Aurora said delivered its official results for the fourth quarter of fiscal 2020 following up from a recent preannouncement of unaudited numbers. The company reviewed the drop in quarterly revenue, but investors were more disappointed that the company suggested revenues could continue to decline.  Aurora said its net revenue was expected to be in the range of $70 million and $72 million, versus $75.5 million in the third quarter. The company said that cannabis net revenue is expected to be between $66 million and $68 million, a sequential drop from the third quarter net revenue of $69.6 million. The actual number came in at $72.1 million, a sequential drop of 5%. Cannabis net revenue was $67.5 million in Q4 2020, a 3% decrease from the prior quarter.

At the time, new CEO Miguel Martin said, “Aurora has slipped from its top position in Canadian consumer, a market that continues to support material growth and opportunity. We look to expand beyond the value flower segment, leverage our capabilities in science and product innovation, and put our effort on a finite number of emerging growth formats. This entails prioritizing our San Rafael, Aurora and Whistler premium brands in flower, pre-rolls and vapor, which will be shortly followed by strategic marketing and innovation efforts in concentrates and edibles.”


Debra BorchardtSeptember 23, 2020
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6min9640

Aurora Cannabis Inc. (NYSE: ACB) delivered its official results for the fourth quarter of fiscal 2020 following up from a recent preannouncement of unaudited numbers. The company reviewed the drop in quarterly revenue, but investors were more disappointed that the company suggested revenues could continue to decline. The stock was falling by over 16% in early trading to sell near $6.

A couple of weeks ago Aurora said its net revenue was expected to be in the range of $70 million and $72 million, versus $75.5 million in the third quarter. The company said that cannabis net revenue is expected to be between $66 million and $68 million, a sequential drop from the third quarter net revenue of $69.6 million. The actual number came in at $72.1 million, a sequential drop of 5%. Cannabis net revenue was $67.5 million in Q4 2020, a 3% decrease from the prior quarter.

First Quarter Revenue To Fall 10%

During the company’s earnings call after the market close on Tuesday, CFO Glen Ibbot said, “Following the divestiture of non-core subsidiaries during fiscal 2020, our net revenue in Q1 2021 should be comprised exclusively of cannabis net revenue, which is expected to be between $60 million and $64 million, compared to the $67.5 million of Q4.” The company noted that its medical cannabis business has remained steady, but the retail business continues to have problems. The company focused its efforts on the value brand Daily Special. Ibbot said, “Daily Special our value brand accounted for 62% of total net consumer revenue from flower in the quarter as compared to 35% in the third quarter. This is the primary factor impacting the decline in our average selling price per gram of dried cannabis flower.” The company also noted that once it began to focus on a value brand that its competitors did as well.

They were first mover into that value segment. However, others quickly followed. And when you’re displaying on price it just becomes diminishing return. And so, I think the company got a bit distracted by the success that they saw with that discount offering which was Daily Special, which sort of delayed other endpoints such as vapor and pre-rolls. There is a lot of growth in the category and then everyone else kept piling in and because there with such a reliance upon that discount business and a lot of different ways both on the gross side, on the sales side, on the trade marketing side when that was just completely you know pressed against by competitive pricing pressure it became hard to pivot.

New CEO Miguel Martin said, “Aurora has slipped from its top position in Canadian consumer, a market that continues to support material growth and opportunity. We look to expand beyond the value flower segment, leverage our capabilities in science and product innovation and put our effort on a finite number of emerging growth formats. This entails prioritizing our San Rafael, Aurora and Whistler premium brands in flower, pre-rolls and vapor, which will be shortly followed by strategic marketing and innovation efforts in concentrates and edibles.”

Reducing Expenses

On a positive note, Aurora has reduced its SG&A cost, which includes R&D spending from over CAD100 million in Q2 2020 down to CAD64.6 million in Q4 excluding approximately CAD3 million of non-recurring costs related to the business reset. The company sid it is now operating at a targeted quarterly estimated run rate in the low CAD40 million range as of Q1. “Reducing the run rate to below CAD40 million range was very important that has strived to deliver positive EBITDA. We also believe this level of SG&A and is quite sustainable and very capable of supporting a much higher revenue margin.”

Cash

The company continues to sit atop a mountain of cash – $230 million. Its cash use in the fourth quarter was similar to the prior quarter, however, the mix within the use showed significant positive progress. In Q4 2020, Aurora used $53.3 million cash to pay down term debt and lease obligations, and following further pay downs subsequent to the quarter-end, term debt stands at $110.5 million as of September 21, 2020. Cash used for capital expenditures was $32.8 million, which includes invoices paid related for work done in Q3, and was $51.2 million lower than in Q3. Cash used in operations was $63.9 million, excluding the $105.5 million of non-cash inventory impairment in the cost of sales.


Debra BorchardtSeptember 8, 2020
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6min10832

Aurora Cannabis Inc.  (NYSE: ACB) gave an update on its business in which the company said it would take a $1.8 billion charge as it released unaudited preliminary fiscal fourth-quarter 2020 results. Revenues also fell sequentially. As an aside, the company also named a new CEO Miguel Martin.

Fourth Quarter Revenue Drops

Aurora reported that its 2020 fourth-quarter net revenue was expected to be in the range of $70 million and $72 million, versus $75.5 million in the third quarter. The company said that cannabis net revenue is expected to be between $66 million and $68 million, a sequential drop from the third quarter net revenue of $69.6 million. The company said in a statement, “We expect adjusted gross margin before fair value adjustments on cannabis net revenue to be within a range of 46%-50%, with lower gross margins expected from non-cannabis business segments.”

Billion Dollar Charge

Aurora also warned investors that there will be a number of balance sheet adjustments to recognize market realities that will range between $1.6 and $1.8 billion. “These adjustments include previously announced fixed asset impairment charges, now expected to be up to $90 million, due to production facility rationalization, and a charge of approximately $140 million in the carrying value of certain inventory, predominantly trim, in order to align inventory on hand with near term expectations for demand.” The comapny said that almost 40% of the inventory is going through a fair value adjustment.

“With the difficult actions we have taken since February to right-size our team and our production footprint now behind us, these amendments to our credit facility provide us with greater flexibility over the next few quarters as we focus intensively on top line opportunities,” stated Glen Ibbott, Aurora’s Chief Financial Officer. “We thank our lending partners for their continued support to reach this agreement. At June 30, 2020, Aurora had approximately $160 million cash on hand. Today, we also have approximately $275 million (US$220 million) available under our existing at-the-market (“ATM”) program which provides us with additional balance sheet support if required as we drive toward achieving Adjusted EBITDA profitability in the near term.”

Right Sizing The Company

As the company adjusts to a new normal, it has embarked on a process of rightsizing its expenses and retooling its debt. The sales, marketing and administrative costs in the second half of fiscal 2020 have been cut from over $100 million in the second quarter down to an expected range of $60 to $65 million in thr fourth quarter. This excludes approximately $3 million of non-recurring costs related to the business reset and $2 million of costs associated with divested businesses.

The company worked with its bankers to get the following adjustments to its debt load.

  • Adjustment of the total funded debt-to-equity covenant to 0.28:1 for Q4 2020 and Q1 2021, and 0.25:1 thereafter, allowing for room to take the balance sheet adjustments noted above
  • Reduction in the Adjusted EBITDA milestones required for the trailing twelve-month period ending June 30, 2021 from $51 million to $20 million, including delaying the requirement to generate positive Adjusted EBITDA to Q2, in line with management’s revised tactical commercial plan
  • Reduction in the size of the revolving facility from $43 million to $15 million to better align with the Company’s average receivables balance and to reduce unnecessary standby fees

New CEO

Separateley, the company announced that Michael Singer, who has served as Interim CEO since February 2020, has stepped down from his temporary role but will remain Executive Chairman. Miguel Martin was named CEO. He is a 25-year consumer packaged goods industry veteran who joined Aurora from Reliva where he served as Chief Executive Officer. He assumed the role of Chief Commercial Officer of Aurora in July 2020. Prior to Reliva, Mr. Martin was the President of Logic Technology, one of the largest manufacturers of electronic cigarettes. He also held the position of Senior Vice President and General Manager of Altria Sales & Distribution.


Debra BorchardtJune 29, 2020
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6min7290

It’s time for your Daily Hit of cannabis financial news for June 29, 2020. 

On the Site 

Aurora Cannabis 

It’s been a rough road for some of the OG’s of the cannabis industry. Today, Aurora Cannabis (NYSE:ACB) said its Co-Founder Terry Booth had retired from his role as Director of the Company, effective June 26, 2020. Mr. Booth was the Chief Executive Officer of Aurora from December 2014 through February 2020 and served on Aurora’s Board of Directors since December 2014. 

According to Wikipedia, 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. The company went public in Canada in 2017 and then in 2018 began trading at the New York Stock Exchange. 

Cannapreneur 

Green Market Report CEO Debra Borchardt: 

Kevin Harrington has recently joined with Cannaprenuer Partners, a company that is investing in cannabis companies. Kevin, you’ve not been in cannabis, but you have certainly been in the corporate world and businesses. You’ve been helping so many companies get started or grow. What at this point prompted you to get into cannabis and specifically choose to join up with Cannaprenuer? 

Kevin Harrington: 

Great question. Thank you. If I go all the way back, I’ve been a product guy for many years. 38 years ago I was creating infomercials and As Seen on TV, and doing some fun things with Jack LaLanne and the juicer, and George Foreman, and Tony Little, and Billy Mays. That’s been my previous life, and taking a lot of pitches. Of course, then original Shark on Shark Tank, being able to take pitches on national television, that was pretty cool. But one thing Shark Tank never did, they never took pitches about cannabis. Shark Tank is on ABC Network. It’s the Disney Group and so cannabis was not their cup of tea. I don’t know if they’ll change that at some point, but most of the entrepreneurs and judges and Sharks are in cannabis investments, O’Leary and Cuban, et cetera. 

 In Other News 

Innovative Industrial Properties, Inc. (NYSE: IIPR) announced today that it has commenced a public offering of 1,800,000 shares of its common stock. The company said it expects to grant the underwriters a 30-day option to purchase up to an additional 270,000 shares of its common stock. The company said it intends to use the net proceeds from this offering to invest in specialized industrial real estate assets that support the regulated cannabis cultivation and processing industry that are consistent with its investment strategy, and for general corporate purposes. 


Debra BorchardtJune 29, 2020
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5min15660

It’s been a rough road for some of the OG’s of the cannabis industry. Today, Aurora Cannabis (NYSE:ACB) said its Co-Founder Terry Booth had retired from his role as Director of the Company, effective June 26, 2020. Mr. Booth was the Chief Executive Officer of Aurora from December 2014 through February 2020 and served on Aurora’s Board of Directors since December 2014.

“On behalf of our Board of Directors and management team, I would like to thank Terry for his leadership over the years and for his tenure as a director,” said Michael Singer, Executive Chairman and Interim CEO of Aurora. “As one of the original cannabis visionaries, Terry leaves an enviable legacy in the form of Aurora Cannabis. He helped set the table for the company to lead in Canada and globally, and we continue to execute our plan to do so profitably.”

According to Wikipedia, 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. The company went public in Canada in 2017 and then in 2018 began trading at the New York Stock Exchange.

Founders Forced Out

Founders often do quite well when their companies go public. Their large stake of shares suddenly becomes very valuable and at a certain point, the founder can sell those shares and capitalize on all the sweat equity and sacrifice it took to get the company to that point. Of course, the flip side to that coin is that the board of directors can now vote you out from your role at the company. That has been the case this year as boards have tossed founders and co-founders out as an expression of performance displeasure.

Here’s a shortlist of the leaders who got their walking papers this year.

  • Kevin Murphy, Co-founder of Acreage Holdings Inc. in June.
  • Hadley Ford, Co-founder of iAnthus in April.
  • Peter Horvath, Co-founder at Green Growth Brands in March
  • Joe Caltabiano, Co-founder, and president of Chicago-based Cresco Labs in March.
  • Jose Hidalgo Co-founder of Cansortium, a medical marijuana dispensary operator in Miami in February.
  • Andy Williams, Co-founder of Denver-based Medicine Man Technologies in February.
  • Adam Bierman Co-founder of  MedMen Enterprises in January.

In 2019, the trend seemed to be kicked off when Bruce Linton was asked to leave Canopy Growth. He had built it into one of the biggest cannabis companies in the industry, but his partnership with Constellation Brands (NYSE:STZ) proved to be his undoing as that corporate entity took over.

Most of the founders were asked to leave after the companies found themselves boxed into strategic corners. Not enough revenue coming in to satisfy all the money invested, much of it achieved through expensive debt deals. Boards always take out the CEO as a sign of acting in the best interests of the shareholders.

Still, the cannabis community is a small one and many of these founders were synonymous with their companies. When conferences do return, the companies will be familiar but the face won’t be.

 

 

 


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