Aurora Cannabis has suffered another closure of a large cultivation facility after it posted a $1 billion loss in Q3. Aurora Sky, located beside Edmonton’s International Airport, is the world’s largest cannabis growing facility. The company previously announced that this facility is operating at 25% capacity. In a prior attempt to save costs, Aurora shuttered its Medicine Hat facility while it was still under construction.
Profitability seems a long way away from most publicly owned licensed producers as they continue to post large losses each quarter. Despite cost-cutting measures such as reducing their workforces and selling off facilities, they are still bleeding red.
Aurora blames the extreme loss on pricing pressure as consumers are demanding lower value flower but there is also a lot of increased competition from the craft cannabis sector. This trend is like that seen in the beer industry, where the large commercial breweries keep losing market share to local craft breweries as consumers demand higher-quality locally-produced products.
Posting losses each quarter has not stopped Aurora from acquiring new companies in its quest for something that will make them money. It recently purchased craft cannabis producer Thrive to advance its premiumization strategy. That strategy resulted in their average net selling price per gram of dried cannabis increasing 20% to $5.41 from $4.52 in the previous quarter.
Net revenue from recreational cannabis went down from $14.4 million in Q2 to $10.3 million in Q3, which ended March 31, 2022, and total revenue was down 17%. In a press release, the company says, “The decline [is] due mainly to industry-wide pricing pressures across our portfolio and exacerbated by retail store closures in key provinces for the Company’s premium offerings.”
Aurora will keep its head office in Edmonton as it works towards generating profit by the first half of fiscal 2023.