The Aurora Sun facility in Medicine Hat is seen in January of this year. City officials are still saying the facility is of benefit to Medicine Hat as the company continues to cut and, likely, push back plans at the 1.6-million square-foot facility.--NEWS FILE PHOTO
cgallant@medicinehatnews.com@CollinGallant
Aurora Cannabis is cutting further in an effort to become profitable and find its space in the developing marijuana marketplace, but steep cuts at its only major operating facility could add more gloom to the outlook in Medicine Hat.
The city’s economic development office however, says there are positives in the company’s actions, and officials still voice support for a package of development aid put together to bring Aurora here.
Further construction on the 1.6-million square-foot “Aurora Sun” greenhouse is on hold as the company says its potentially massive crops won’t be needed to meet forecasted demand.
On Wednesday, the Edmonton-based cannabis producer announced that operations at the Aurora Sky facility in Leduc will be reduced by three quarters and more than 200 workers would be laid off.
Those two facilities represent the heart of Aurora’s previous production plan to produce high-quality cannabis at an extremely low cost in massive “state-of-the-art” plants.
The move seemingly puts the restart at Sun behind bringing back production at Sky, but Invest Medicine Hat officials described Aurora’s plan to shutter smaller growing facilities as “elevating Sun” in the company’s future.
“When you look at the whole picture, it has attracted $200 million (in construction) and employed a ton of people,” said Jason Melhoff, managing director of the Invest Medicine Hat department at city hall.
“And it’s grown the tax base. Aurora considers Sun a core building block, and we’re hearing all the right things about (its business plan).”
When Sun was announced by Aurora in the spring of 2018, it was part of a deal negotiated by city hall officials but brought forward by Invest officials when the service was contracted to an outside agency.
Included was up to $6.6 million in waived development fees for the 72-acre site in the Box Springs Business Park. As well, an undisclosed power supply agreement was potentially worth $10 million per year in revenue to the city utility.
That huge deal led the city to upgrade a substation in the northwest sector years ahead of schedule at a cost of $7.5 million, though Aurora contributed another $1.2 million toward the project.
At the time, property tax on such greenhouse facilities in cities was scheduled to be eliminated provincewide, but that was reversed in 2019 and it is now fully taxable.
The original impetus, according to council at the time, was the potential of up to 400 new jobs.
“We now have a new major taxable (asset) in the city,” Melhoff said, further stating the city is still willing to consider negotiating with companies and investors looking to locate here.
“Our mandate is to look at each proposal on its own merits.”
Statements from Aurora on Wednesday say the new scale-back is in line with recently hired CEO Miguel Martin’s plan to concentrate on “premium” offerings to consumers.
“These hard decisions are being taken to provide cashflow and provide agility for our business,” said Martin. “We will continue to make decisions and transform Aurora in the long-term interests or our shareholders.”
In 2019, debt holders and shareholders forced major changes at the company that had grown rapidly at the time cannabis was becoming legal, but hadn’t shown profit.
In late 2019, the News reported that Aurora was only selling one-quarter of what it was producing at that time. Last summer it announced that five smaller growing facilities across the country would be closed.
This fall the company said it would completely halt further construction at Sun, and would pause work to acquire a federal cultivation licence at the facility.
It would eventually be able to produce 263,000 kg of dried cannabis leaf each year.
The maximum production capacity at Leduc’s Aurora Sky is 100,000 kilograms.
