Canadian producer Aurora Cannabis is closing its last facilities in Denmark and will resume European supply from Canada, a change that should help reduce its costs.
The move comes more than a year after the company sold its Nordic Sky facilities in Odense, Denmark, for around 5 million euros.
“This is not a reflection of our European business as it remains strong with healthy margins and growth prospects,” Aurora’s spokesperson told MJBizDaily.
“However, the Nordic site faced many unique challenges, beyond our control, which could not be overcome despite our best efforts. »
A complicated installation in Europe
This release ends a difficult period for Aurora in the Danish market. In early 2018, Aurora had considered setting up Europe’s “largest” medical cannabis producer in Denmark when it unveiled its plans to become the second grower allowed to build a facility in the Scandinavian country after Canopy Growth.
The facility was expected to produce an impressive 130 tonnes of medical cannabis per year, far more than the European market is currently demanding.
Germany, which is the largest market for medical cannabis in Europe, imported only 25 tons of cannabis for medical or scientific purposes in 2022, with a 19% increase compared to the 20,769 kilograms imported in 2021.
A few months before Aurora committed to Denmark in 2018, rival producer Canopy Growth Corp. unveiled plans to establish its own 4-hectare production site in Odense. Canopy eventually sold the facility to Australian company Little Green Pharma in 2021.
In a conference call with analysts on Wednesday, Aurora CEO Miguel Martin said the Denmark shutdown was part of a roughly C$40 million cost savings plan, which is expected to be completed by here on March 31, 2024.
“We have taken the decision to close our Nordic production plant in Denmark and we will supply [l’Europe] from our Canadian facilities, which have much lower unit costs and much more reliable supply,” said Chief Financial Officer Glen Ibbott.
“We believe this will allow us to be even more competitive in a growing European market. »
Mr. Martin identified three “main” challenges with the Danish installation.
“First, regulations around what would be traditional pathogen remediation – whether powdery mildew or whatever – in this facility made it difficult to achieve the same yield and production. than the ones we get in Canada,” the CEO told analysts.
“Secondly, the size of these greenhouses did not allow for the same production efficiency that we achieve in our indoor facilities in Canada. »
Finally, Mr. Martin said that European markets “for one reason or another” consider Canadian products to be of higher quality and more valuable to them.
