Aurora Cannabis says it’s pausing operations at its Sun greenhouse in Medicine Hat, Alberta, “indefinitely.”
The closure represents the latest casualty after the industry significantly overshot the production capacity needed to meet demand in Canada’s expanding adult-use marijuana market.
Those greenhouse deals ultimately led to direct real estate losses for Canadian producers worth millions of dollars and write-downs worth billions of dollars, Marijuana Business Daily reported earlier this month.
Only a fraction of the facility was ever used, however.
Aurora deferred its construction earlier this year as part of an effort by the struggling company to more closely align its global production with actual demand.
At the time, the company said it expected to use only 238,000 square feet of the facility’s planned 1.6 million square feet.
The company had already put a considerable amount of capital into the project.
As of March 31, idle property, plant and equipment attributed to the Aurora Sun facility reached 257.3 million Canadian dollars ($197 million), the company disclosed in a regulatory filing.
That makes it one of the most expensive cannabis greenhouses ever built but not completed.
“Aurora continuously and carefully reviews the company’s operations network to ensure it is fit for our business today and in the near term,” Aurora spokeswoman Michelle Lefler said in a statement to MJBizDaily.
“In response to the recent shifts in the industry and our strategic imperatives, the company announced it will pause operations at Aurora Sun in Medicine Hat, Alberta, indefinitely.
“We remain focused on advancing our portfolio of premium and super premium brands and accelerating innovation in high margin product categories.”
Lefler declined to say whether Aurora plans to sell the Sun facility.
Large cannabis greenhouses have been going up for sale across the country, but producers have had a hard time recouping costs.
Earlier this year, Aurora accepted an offer for its large greenhouse in Exeter, Ontario, for approximately half its CA$17 million listing price.
Cost overruns have been common for Canadian cannabis cultivators.
The price tag for Aurora’s other large facility in Alberta – dubbed ‘Sky’ in Edmonton – jumped to CA$150 million before it was completed.
Aurora trades as ACB on the Toronto Stock Exchange and the New York Stock Exchange.
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at firstname.lastname@example.org.