The Aurora Sun complex in northwest Medicine Hat is seen in this May file photo. The company announced Tuesday that it will close five smaller facilities across the country and use the 1.6-million square-foot facility, which is scheduled to be commissioned this month, to meet any new demand that develops.--NEWS FILE PHOTO
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Aurora Cannabis will shut down five of its smaller facilities across Canada to cut operating costs and concentrate on its large, highly efficient, mass scale greenhouses, which could include Aurora Sun in Medicine Hat, the company announced Tuesday.
However, that could further delay an operational start date in a small portion of the the massive greenhouse that is still under construction in the city’s north end.
The Edmonton-based medical and recreational marijuana producer has vowed to trim expenses and boost itself toward profitability this year. That comes after the size of the legal cannabis market failed to meet exceptions after 18 months and a business transformation plan was laid out in February.
A new update from the company Tuesday lays out five facility closures, a plan to layoff 700 staff, and focus activity at lower cost, Sky Class facilities, but reiterates its promise for positive earnings early next year.
Retained production includes Aurora Sky in Leduc as well as Aurora Sun, which is designed with 1.6 million square feet of growing space, but the statement is unclear about a plan to have the Medicine Hat facility commissioned this month.
“As previously stated, the Aurora Sun facility has been scaled back to six grow rooms, and will allow for efficient scale production on an as needed basis as market demand grows,” it read.
The company, which vowed to continue local construction after a late-2019 shake-up, did not respond Tuesday to requests for clarification.
Figures released in February showed that Aurora only sold about one-quarter of the volume that was produced over the previous six months.
At the time, financial officer Glen Ibbotson told a conference call with investors that the imbalance was being evaluated.
“We had a view several years ago that the market would (take) everything we were producing, and in the short term that’s not necessarily true,” he said. “Rest assured, it’s something we’re paying to … we won’t allow that situation to persist.”
The company has long touted its major facilities and low-cost production as a key advantage, and a way to discern itself to investors from others in the relatively young legal cannabis market.
However, with demand lagging well behind expectations, the company moved to simplify its operations in early 2020, and stated Tuesday that it will meet its operational spending goals, and will cut staffing costs by 30 per cent once the facilities are closed over the next six months.
“This has not simply been a cost-cutting exercise,” CEO Micheal Singer said in the release, adding the “facility rationalization” and write-down on inventory will improve margins.
“We have undertaken a strategic realignment of our operations to protect Aurora’s position as a leader in key global cannabinoid markets, most notably Canada.”
Aurora will continuing production operations at its the gigantic Aurora Sky facility in Leduc and nearby Aurora Polaris processing facility, as well as a facility in Whistler, B.C., and an EU-certified plant in Exeter, Ont.
It will close the company’s original production facility in Cremona, Alta., (called Aurora Mountain), plus shutter plants in Saskatoon and Markam, Ont., plus Lachute and Pointe-Claire, Que.
The company also announced it will service its European contracts from the Aurora Nordic facility in Denmark.
