Edmonton marijuana producer Aurora Cannabis is poised to close five of its grow sites across Canada and lay off almost a third of its production workforce.
The company on Tuesday announced next steps in the “business transformation plan” it launched in February to “better align the business financially with the current realities of the cannabis market in Canada while maintaining a sustainable platform for long-term growth.”
Industry observers have said cannabis companies’ fight for market position, against illicit as well as fellow licit producers, has left them piling up inventory, in turn leading to significant price cuts.
The Aurora facilities to be closed include Aurora Prairie, the former CanniMed Therapeutics production site in Saskatoon, a 97,000-square foot, 30-room 19,000-kg/year grow and oil extraction facility and the first and only supplier of medical cannabis to Health Canada from 2000 until 2013.
Also slated for closure is Aurora Mountain at Cremona, Alta., a 55,200-square foot, 4,800-kg/year plant. The Cremona plant was Aurora Cannabis’ first cannabis grow facility and was billed as the world’s first-ever custom-built cannabis grow site.
The closures also include two Quebec sites, Aurora Vie (40,000 square feet, 4,000 kg/year) at Pointe-Claire and Aurora Eau (48,000 square feet, 4,500 kg/year) at Lachute.
The two Quebec sites had been set up for cultivation of “niche and exotic cannabis varieties that cannot be grown in other facilities,” and to meet EU export standards. Aurora Vie today also supplies the company’s Canadian medical and consumer markets with dried flower, oil products and softgel capsules.
The company will also close Aurora Ridge, a 55,000-square foot, 10-room, 7,000-kg/year facility at Markham, Ont., which supplied Canadian consumer and medical markets as well as international markets.
In all, the closures are expected to translate to about a 30 per cent cut in production staff over the next two fiscal quarters, Aurora said Tuesday.
By the end of Q2 2021, Aurora said it expects to consolidate its Canadian production and manufacturing work at four sites: Aurora Sky and Aurora Polaris, both at Edmonton; Aurora River, at Bradford, Ont.; and Whistler Pemberton, at Pemberton, B.C.
A fifth site, Aurora Sun at Medicine Hat, Alta., has been scaled back to six grow bays and “will allow for efficient scale production on an as-needed basis as market demand grows.”
Also, where the company was previously supplying some of its European customers through the Canadian plants now slated for closure, it said Tuesday it plans to “immediately ramp up” cannabis production at its Aurora Nordic facility at Odense, Denmark.
From that site, Aurora said, it believes it can “adequately” service the European market with EU-GMP certified product.
Moving production to larger-scale operations is expected to lead to a “material reduction in per unit cost of goods” by Q3 2021, Aurora said.
For the shuttered sites, next steps will be evaluated at the time of the closures, a company spokesperson said Tuesday via email.
“This has not simply been a cost-cutting exercise,” interim CEO Michael Singer said in the company’s release Tuesday.
Rather, he described it as “a strategic realignment of our operations to protect Aurora’s position as a leader in key global cannabinoid markets, most notably Canada” and to “improve gross margins and accelerate our ability to generate positive cash flow.”
Along with the plant closures and related job cuts, Aurora on Tuesday also announced it will cut about 25 per cent of sales, general and administration staff positions across “all levels of the company, including a restructuring of the executive leadership team.”
Of that group, the company said, most of the staff cuts are “with immediate effect.”
Between office and production staff, the cuts are expected to affect about 700 positions across the company, Aurora’s spokesperson said Tuesday. — Glacier FarmMedia Network