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While recreational marijuana is out of bounds, and countries other than Canada are considering legalization, cannabis companies have many potential routes to develop.
Aurora Cannabis Inc.
CBA + 3.58%
CBA + 3.09%
, the world's second most valuable marijuana producer, is setting a different path from that of some of its competitors in the marijuana industry. She has not yet purchased any marijuana assets in the United States, such as Canopy Growth Corp.
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CANNABIS, + 0.10%
signed or signed a major US-based partner, such as Cronos Group Inc.
CRON, -0.59%
CRON, -0.97%
has neither grown to CBD or hemp, such as Tilray Inc.
TLRY, + 0.33%
.
After Aurora's third-quarter financial results on Tuesday night and a teleconference Wednesday morning, MarketWatch discussed with company CEO Cam Battley what the company sees as an opportunity for cannabis and how it is takes a different approach from some of its rivals. This is how Battley and Executive Director Terry Booth spoke on the teleconference and shared their thoughts on the future.
Enter the United States
During the conference call on Wednesday, Booth said that even if the United States legalized marijuana at the federal level today, it would take years before the country is able to provide products and solve the problems the country faces. Canada is facing since the recreational pot is legalized in October.
If federal legalization occurs in the United States, it would be important to remove barriers to the movement of goods between states. "If they do not erase the line from state to state, then it's a very difficult market to operate on a large scale," Booth said during the teleconference. "The [multistate operators] have small facilities in various states. It's not Aurora's way … if they erase the boundaries of the state, it becomes a huge opportunity. "
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Booth pointed to Nevada as the best state for an American company to enter, largely because of its licensing system and the number of retail products available. Australis Capital Inc.
Ausaf, + 2.62%
Aurora's investment vehicle, is based in Nevada.
Although Battley pointed out that Aurora "was not doing any news" on Wednesday in terms of the announcement of acquiring an American company, he reiterated that Aurora was trying to find the company. The most appropriate approach for the United States, with the help of famous hedge fund manager Nelson Peltz. .
Booth said some of the US weed companies will have a "first-mover advantage" if the US legalizes the pot and that there "would be some selection to make in the market". [multistate operator] The valuations of these companies would increase significantly if the US federal government legalized the pot, but added that it is a mistake to value these companies based on their presence in retail.
"You can still open more retail stores," Booth said during the conference call. "The value of Ontario's top 25 stores is shrinking rapidly. We are rather happy not to have taken part in this battle. "
Cannabis products without flowers
For potted products such as sprays, Battley stated that Aurora had allocated its resources to products for which the company knew that there was a demand, based on US legal data, and in which the leaders thought they could generate the greatest profit.
Unlike its competitor Canopy Growth, which required a $ 4 billion investment from Corona Constellation Brands Inc.
STZ, -0.17%
Aurora executives said the company was keeping a close eye on beverages but had not made a meaningful commitment to developing beverages. Battley said that it would probably take time, marketing, and experience to change consumer tastes and grow the market beyond "something like 2% or less" in the US .
For more information: Weed beer is near and it's going to get weird
Booth said that if Aurora were to get into drinks in the near future, it would be a kind of wellness drink.
"We believe that there is a huge market potential," Booth said during the call for results. "But on the side of intoxication, as far as cannabis drinks are concerned, the market is simply not there, it has not been proven that it is a popular product, anywhere and [we’re] not able to market it as typical alcohol companies or brewers. "
Battley said that Aurora already has a product against the vape in the Canadian market in the medical system, and that it is usually an important segment that will not require much development. Recipe executives specifically mention sprays and gummy candies as among the best-selling products in the United States.
European cannabis market
Interviewed by an analyst at the teleconference about Aurora's growth at the pond, Battley said, "Let me start by saying how much we love Europe. Europe is a very competitive market, there is currently only one producer in Europe. It is one of the eight GMP certified countries by the European Union … very limited competition, very limited supply. "
Aurora executives said the company had "boots on the ground" in Italy, Germany, Malta, Portugal, the UK and the Netherlands and noted that only three companies had won contracts of cannabis distribution in Germany.
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"I do not sleep anymore to be able to supply this global market," Booth said during the teleconference. "The European market is not going anywhere, but maybe not during this quarter, but we will start shipping in bulk to Europe shortly. We are the first to sell valuable derivatives in Germany, which are starting to get traction with doctors … they will always take everything we can give them. "
Booth stated that if it were a "basic business decision in 20 years, at current prices, Aurora could simply stop selling recreational pot in Canada."
"But we will not do that," he said. "We are Canadians: they are Canadian medical patients first, then Europe's medical patients, and the third in the adult market."
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