The Aurora Sun greenhouse in northwest Medicine Hat could be completed and converted to grow ornamental flowers and vegetable seedlings, according to a release from Aurora Cannabis on Monday. NEWS PHOTO COLLIN GALLANT
cgallant@medicinehatnews.com@CollinGallant
Aurora Sun will rise again, according to the owner of the half-built greenhouse in Medicine Hat, and a new power agreement from the City of Medicine Hat helped guide the deal to completion.
Aurora Cannabis said Monday that the mothballed, million-square-foot greenhouse has been transferred to a subsidiary that sells ornamental flowers and starter vegetables to the wider greenhouse industry.
Bevo Farms already operates the similar Aurora Sky greenhouse in Leduc since last fall.
This spring, Aurora officials touted its ability to provide more stable, base income for the company that is struggling to become profitable.
It announced in June that Sun would also be transferred to the Bevo business unit, which was completed on Monday.
“This transaction will positively impact Aurora’s cash flow, while benefiting Bevo as the company proceeds with expanding their business,” read a statement to the News from Aurora, which owns a majority stake in Bevo.
“There continue to be close synergies between Aurora and Bevo and mutual benefit to the City of Medicine Hat who have been supportive of our investment in the community.”
There is no immediate time table for how the company will proceed in Medicine Hat – Bevo has only operated in Alberta for a year, including the conversion of the Sky facility to grow orchids for export and starter vegetables for wholesale, rather than marijuana for medical and recreational use.
That was profitable, however, according to June’s financial reports.
“Bevo has successfully repurposed the Aurora Sky facility in Edmonton, and we’re excited to further support their continued growth,” said Aurora CEO Miguel Martin in a statement Monday.
The City of Medicine Hat forgave $6 million in development fees to help lure the Edmonton-based Aurora to build in the Hat in 2018, and held up a large power deal as hallmark economic development. An original promise of 400-plus jobs, however, has been on pause since construction stopped in 2020.
Rochelle Pancoast, the managing director of the city’s Energy, Land and Environmental Division, said Monday that the city was very positive about seeing the project “reactivated.”
“We’re very encouraged to have this move forward, with renewed economic activity at the site, synergies with local growers, and for a company based in Medicine Hat to have a national reach is all very positive,” she said.
She said the city’s part in smoothing the transfer was to terminate a clause in the initial power contract that required it be transferred to any new owner as a condition of sale.
Aurora power contract – a massive 42-megawatt supply agreement for the facility that Aurora said would be once of the most highly automated in the world – would likely be much smaller for a Bevo operation.
Generally, pricing of the 2018 deal was in line with standard city practice of developing prices in standard industrial offerings, Pancoast said.
But due to the size of the contract, the city insisted on a minimum payment clause, sometimes known as a take-or-pay clause, to cover risk of building new supply and blocking off the power.
That provided the city with an estimated $1.1 million per year in power payments over several years, despite the fact no power was delivered.
“It (the clause) was proving to be an impediment to the deal (with Bevo), and we agreed to remove it,” said Pancoast.
Going forward, she said, the city expects to enter into a standard pricing arrangement that is offered to large industrial customers.
Bevo officials also thanked the city by name in its release announcing the transfer.
“Bevo’s ability to deliver propagated plants directly from Medicine Hat to the Alberta greenhouse industry and beyond delivers a win for the Alberta greenhouse industry, the City of Medicine Hat and its residents, for Bevo, and for Aurora,” said Leo Benne, CEO of Bevo, in the Aurora release.
“We would like to express our gratitude to the City of Medicine Hat for their essential contributions to this transaction. We look forward to further developing our partnerships in Alberta in the years to come.”
A 2019 Alberta greenhouse sector report by the province found the Medicine Hat region, including Redcliff, was home to 35 growers with 7.2 million square feet in growing space for vegetables.
The Lethbridge region boasts another 3.7 million square feet, and combined, the two largest regions account for 62 per cent of all greenhouse acres in the province.
Bevo has operated in the B.C. lower mainland since the 1940s, but 50.1 per cent of the company was acquired by Aurora last summer, about the same time a potential sale of Sun to an unnamed buyer fell through.
The reverse takeover of Bevo involved Aurora spinning Aurora Sky in Leduc into the new company.
The value of Sun to Aurora’s balance sheet could be $15 million in payments over time, based on Bevo meeting certain financial milestones.
The transfer also removes $2 million in annual carrying costs of the facility – believed to be property taxes and the terms of the power contract with the City of Medicine Hat – from Aurora’s expenses.
