Cannabis Is Not Dead' Says Aurora CEO From Helm Of Largest Global Medical Marijuana Company

Last month Canadian marijuana giant, Aurora Cannabis Inc. ACB, released its financial results for the fiscal second quarter that ended December 31. Like many others in the space, Aurora is not yet fully profitable. However, it has a modest positive adjusted EBITDA of CA$1.4 million ($1.04 million), in line with prior guidance, so it's taking all the right steps toward achieving profitability.

Aurora is also projected to remain EBITDA positive going forward while working on reaching positive operating cash flow.

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By Nina Zdinjak

Dropping The Ego – Focusing On Medical

There’s no doubt that these are challenging times for the industry, marked by layoffs and decreasing prices. How then is this cannabis company dealing with the crisis? What's its secret?

It appears to be its bet on medical cannabis, writes MJBiz Daily. When many other weed businesses were pushing for recreational, the Edmonton, Alberta-based producer kept its main focus on medical marijuana (MMJ).

“I knew that medical made money. And I know rec was a maybe, coulda, woulda, shoulda, but I knew we were hemorrhaging cash on rec, and we didn’t see it getting better,” Aurora CEO Miguel Martin told MJBiz.

Martin became Aurora’s CEO in 2020 when the company was reporting a net loss of CA$3.3 billion for its fiscal 2020. The only positive light at the end of the tunnel was the company’s “transformation” plan that was undertaken by then-interim CEO Michael Singer.

“But going through that in 2020, as opposed to going through that in 2022 – whether it’s the capital markets, whether it’s the Canadian rec market – I’m just so glad we got it taken care of earlier because right now it’d be a real challenge,” Martin said.

One of Aurora’s biggest problems at the time was that it was growing way more cannabis than it was able to sell. In early 2020 before Martin became CEO, the company had an annual cultivation capacity of 150,000 kilograms of which it was only able to sell one-third.

“I think we all dropped our ego about rec, and that it was going to be OK to be ninth or 10th” in terms of market share, “which would be a 2.7 or a 2.8 (percentage of market) share,” said Martin, a featured speaker at this April's Benzinga Cannabis Capital Conference in Miami.

Under Martin’s leadership, Aurora sold several of its 11 growing sites, halving its production in fiscal 2022 to 73,371 kilograms.

“Medical cannabis is the absolute lion’s share of profitability right now,” Martin said. Indeed, Aurora holds the number one position in terms of medical market share in Canada, serving around 60,000 active MMJ patients.

Ready For A Global Legalization Wave

In addition to the company’s focus on the medical cannabis space, other pillars of its effective strategy include getting ready for a “global legalization wave,” and differentiating itself from others.

In its recent analyst note, Cantor Fitzgerald’s Pablo Zuanic confirms that Aurora was among the first to resize its adult-use operations in Canada, which helped it build a stronger position within the global cannabis market. He acknowledged Aurora’s preparation for its adult-use sales launch in Germany, which is expected in spring 2025.

“Because Aurora is one of only three domestic licensed producers, the company expects to play an active role in the German recreational market once sales begin," Zuanic said.

Martin has said that countries like Australia, Czech Republic, Germany, Israel, Poland and Malta hold the potential for developing marijuana programs and have a “thoughtful science-based regulatory process.”

“That may take longer, but it didn’t seem to be two steps forward, three steps back,” he told MJBiz Daily.

“Cannabis is not dead. The global opportunity is not slowing. I’m of the strong belief that there’ll be a good amount of Canadian companies that are the winners. I think cannabis is alive and well, albeit maybe it’s taking longer.”