Aurora Cannabis, deep in the red, accepted an offer for its 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 deal 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.
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 about whether the adjacent plot was included in the sale.
The 1-million-square-foot greenhouse and 164-acre property were originally purchased by Ontario 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.
At the time, Aurora boasted the sale was “the world’s largest cannabis industry transaction.”
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 noted that Aurora accepted an offer for the Exeter property for net proceeds of CA$8.6 million, and the deal was slated to close in May.
Additionally, Aurora said it recognized impairment losses of CA$9.6 million and CA$11 million impairment on the property during the three- and nine-month periods 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, Aurora reported a net loss of CA$137 million in its third quarter, an improvement over the CA$1.3 billion net loss in the previous three-month period.
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].