Aurora Cannabis, deep in the red, recently sold a large greenhouse in Exeter, Ontario for what appears to be approximately half of its 17 million Canadian dollar ($12.1 million) listing price, and one-third of the original purchase price.
The sale comes amid a broad retreat from some unlicensed and fully licensed cannabis greenhouses in recent months by the largest Canadian producers, who overspent on cultivation space in 2017 and 2018.
The Exeter sale signals that those producers may have a hard time recouping costs on the greenhouses – which can cost upwards of CA$200 million to build – especially as cultivators turn to outdoor production to cut costs.
Other producers mothballing or selling greenhouses include Canopy Growth and the Green Organic Dutchman. Last year Aurora ceased construction at facilities in Alberta and Denmark.
An adjacent 95 acres of land was listed with the Exeter greenhouse for an additional CA$2 million, according to a listing on Cushman & Wakefield’s website that aligned with the Aurora property.
Aurora did not immediately reply to a query from Marijuana Business Daily on whether the adjacent plot was included in the sale.
The 1 million square foot greenhouse and 164 acre property were originally purchased by cannabis producer MedReleaf for CA$26 million in early 2018.
Weeks later, Aurora agreed to purchase MedReleaf in a CA$3.2 billion deal that included the Exeter assets.
That sale – which at the time Aurora boasted was “the world’s largest cannabis industry transaction” – has come to symbolize the irrational M&A that pervaded some cannabis boardrooms.
Aurora committed to selling the Exeter land and greenhouse last November as part of a plan “to rationalize capital expenditures” to align with demand, it said in a regulatory filing.
The same filing stated that Aurora accepted an offer for the Exeter property for net proceeds of CA$8.6 million.
Additionally, Aurora stated that it recognized a CA$9.6 million and CA$11 million impairment loss on the property during the three and nine months ending March 31, respectively.
Retrofitting the greenhouse for cannabis production would likely have required significant outlays.
The facility was never listed as fully licensed for cannabis production and sale.
This week, the cannabis producer reported a net loss of CA$137 million in its third quarter, a improvement over the CA$1.3 billion net loss in the previous three-month period.