EXCLUSIVE: Aurora Cannabis CEO Talks 2021 Plans, Focus On The Key Markets
Aurora Cannabis (NASDAQ:ACB) began trading on the Nasdaq Global Select Market on May 25, 2021.
The Canadian cannabis giant confirmed Monday it had finalized the transfer of its stock exchange listing to NASDAQ from NYSE, as part of its business transformation plan and cost efficiency initiatives, which the company announced last year.
Taking a look at the past year, there is no doubt it was a turbulent one for the cannabis industry. And while other industries felt the negative effects of the global pandemic, cannabis-related companies managed to remain on relatively firm footing as dispensaries and pot shops were declared essential services in many states and permitted to function amid the crisis.
Nevertheless, some businesses in the space experienced challenges, such as having to cut their workforce.
Then again, others were hiring.
The rollercoaster ride continued
In 2020 five U.S. states ushered in cannabis legalization although the much-anticipated legalization in Mexico this year failed to meet a Supreme Court deadline. Cannabis advocates are not giving up. They're now pushing for a special session in the hope of creating one of the world's largest legal cannabis markets.
With the many consolidations that took place in the industry lately – the largest being the recently completed Aphria, Inc.-Tilray (NASDAQ: TLRY) merger – Benzinga was interested to learn what this period would bring for Aurora and what the company’s plans were for 2021. Is it also considering a merger? We reached out to the company’s CEO, Miguel Martin who filled us in on Aurora's business transformation plan.
Improving Balance Sheet
In 2020, Aurora laid off more than 1200 of its employees, and in January of this year, following its deal with Great North Distributors, 200 more workers got pink slips. Regarding the 2020 layoffs, the company cited an effort to improve its balance sheet.
Martin explained that Aurora made “tough yet necessary decisions” in order to get the company back on the road to profitability.
Now, “we are investing in our people. We’re hiring some great people here at the company,” Martin told Benzinga.
“Aurora is a long-term player in the global cannabinoid market and is increasingly positioned to deliver for shareholders over the long run.”
Even though several years ago, Aurora’s stock was valued at $100 and now is below $10, Martin chooses to focus on the present. He said they did what they had to do to adapt to today’s marketplace.
“Our production rate was not sustainable, a trend seen across the cannabis industry. What I can say is that we are one of the first LPs to right-size production. We’ve exited markets and infrastructure that didn’t make sense from a financial standpoint. Looking ahead, we’re focused on our key markets that drive significant revenue growth.”
No Fear Of Competition
The core of Aurora’s business is the medical segment, which the company has been developing for years. In spite of so many companies joining the Canadian medical cannabis scene, Martin is not worried about competition.
“Aurora has deep roots as a medical cannabis company and has been an advocate for patient access in Canada and beyond. Our history of science and R&D gives us a competitive advantage to capitalize on new discoveries and technologies," he said. "We have one of the most comprehensive genetic libraries in the world and we’re investing in genetic mapping to not only better understand our plants, but to deliver a quality product to our patients and consumers."
Regarding the industry's recent rash of consolidation and mergers, Martin is confident that Aurora does not need to go down that road.
“Overall, the action in this space is great news but Aurora does not feel it needs to follow suit to remain competitive. That being said, our excellent balance sheet and the recent capital raise put Aurora in a great place to do so, should an opportunity arise,” Martin added.
Three Principles – Quality, Innovation, Premium Products
Aurora is currently concentrating on three principles – 1) Quality improvement; 2) The launch of the new products; 3) Premium products like vape pre-rolls and concentrates.
“Quality is an absolute non-negotiable for success,” Martin explained.
“Innovation is equally at the core of our focus and we are leveraging the excellence of our superior R&D capabilities to bring new offerings to market, especially in adjacent, value add categories like vapes, pre-rolls and concentrates. Innovation and product line extensions will be seen under Aurora’s leading brands, including San Rafael and Aurora. I am particularly excited about the future of the San Rafael brand as we prepare to expand the brand.”
In 2021, Aurora plans to place its efforts on improving its performance in key markets and delivering shareholder value.
“We’re focusing on key markets that drive significant revenue growth and deliver shareholder value. Specifically, we aim to advance our leadership in our Canadian recreational, Canadian and international medical, and the expanding US marketplace,” Martin noted.
Attracted To The U.S. Market
Aurora is keeping a close eye on the U.S. market, as it wants to be prepared when federal legalization occurs.
“In terms of the U.S. THC market, we won’t simply wait for comprehensive legislation and are assessing ways to move quickly once comprehensive legislation is in place. One thing I am confident in is that the competitive landscape in the US will look very different if THC is de-scheduled because of social justice and economic reforms, which we believe will ultimately drive it,” Martin said.
Aurora is already well-positioned, Martin noted, with Aurora's U.S. CBD brand Reliva, which positions the company “in a strong place to look ahead at the U.S. market as it undergoes market and regulatory changes.”
Aurora is also internationally oriented, believing that the industry has enormous growth potential on a global level.
“We will pursue growth in a measured and sustainable way, leveraging Aurora’s medical cannabis credentials and international footprint to unlock new opportunities and meet consumer demand as it arises,” Martin concluded.
Aurora's shares were trading 5.36% higher at $8.06 per share at the time of writing.
Image Credit: Richard T from Unsplash
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