Aurora Cannabis Announces Supply Agreement with SNDL

Rhea-AI Summary

Aurora Cannabis (NASDAQ: ACB) has announced a strategic supply agreement with SNDL Inc., expanding their existing partnership. Under the new three-year agreement, valued at $27 million, SNDL will supply Aurora with premium cannabis flower products from their indoor facility in Atholville, New Brunswick.

The agreement includes an extension option and builds upon an existing supply relationship between the two companies for cannabis products and input material manufacturing. Aurora's CEO Miguel Martin emphasized the company's focus on maintaining a hybrid manufacturing network, following their strong third quarter performance driven by record-setting growth in international medical cannabis.

Positive

• New $27 million supply agreement secured for three years
• Extension option included in the agreement
• Record-setting growth reported in international medical cannabis segment
• Strong third quarter performance mentioned

Negative

• Increasing reliance on third-party cultivation instead of in-house production

Insights

Financial Analyst

The $27 million supply agreement between Aurora Cannabis and SNDL represents a strategic shift in Aurora's manufacturing approach, reflecting a sophisticated blend of in-house and third-party cultivation. This hybrid model offers several key advantages:

The deal's structure presents significant operational benefits:

• Reduced capital expenditure requirements by leveraging SNDL's existing infrastructure
• Enhanced flexibility in production scaling without fixed cost commitments
• Potential margin improvements through premium product sourcing

This agreement aligns with Aurora's recent performance trajectory, particularly following their strong Q3 results in the international medical cannabis segment. The three-year term with extension options provides stability while maintaining flexibility, important in the volatile cannabis market.

From a strategic perspective, this partnership demonstrates Aurora's evolution from a pure cultivation-focused model to a more balanced, capital-efficient approach. By securing premium cannabis supply without the associated infrastructure costs, Aurora can better optimize its working capital while maintaining product quality standards.

The agreement's timing and structure suggest a maturing cannabis industry where strategic partnerships and operational efficiency take precedence over vertical integration. This could signal a broader industry shift towards more specialized roles within the value chain, potentially improving overall sector economics.

Supply Chain Analyst

This strategic supply agreement marks a pivotal shift in cannabis industry supply chain dynamics. The partnership leverages SNDL's specialized indoor cultivation capabilities while strengthening Aurora's supply chain resilience through:

• Diversified supply sources reducing production risks
• Access to premium quality products without facility investment
• Optimized inventory management through guaranteed supply volumes

The three-year commitment with extension options creates a balanced framework that provides stability while maintaining adaptability to market changes. This structure represents a mature approach to supply chain management, allowing both companies to focus on their core competencies while sharing operational risks.

The agreement's structure suggests an evolution in cannabis industry supply chains, moving away from the traditional vertically integrated model towards more specialized, efficient operations. This trend could lead to improved industry-wide operational efficiency and better resource allocation.

NASDAQ | TSX: ACB

Agreement Complements Existing Relationship Focused on the Supply of Premium Cannabis 

EDMONTON, AB, February 6, 2025 /PRNewswire/ - Aurora Cannabis Inc. (the "Company" or "Aurora") (NASDAQ: ACB) (TSX: ACB) –the Canadian based leading global medical cannabis company, is pleased to announce a strategic supply agreement (the "Agreement") with SNDL Inc. ("SNDL"), a Canadian licensed producer and vertically integrated cannabis enterprise.

Under this Agreement, SNDL is expected to supply Aurora with premium cannabis flower product grown at SNDL's indoor facility in Atholville, New Brunswick. The term of the agreement is for three years with an option to extend and an estimated value of $27 million. Aurora and SNDL have an existing and successful supply relationship for the manufacturing of various cannabis products and input material.

"Following our strong, third quarter performance driven by record setting growth in our international medical cannabis segment, Aurora remains focused on a balanced approach to operating a hybrid manufacturing network of in-house and third-party cultivation. We value our relationship with SNDL and their shared commitment to cultivation excellence," said Miguel Martin, Executive Chairman and Chief Executive Officer of Aurora Cannabis.

"As Canada's leading integrated cannabis company, SNDL is well positioned as a supplier of quality cannabis products to commercial partners like Aurora. We have a shared approach to quality and cultivation excellence and look forward to expanding this relationship further," said Zach George, Chief Executive Officer of SNDL. 

About Aurora Cannabis 

Aurora is opening the world to cannabis, serving both the medical and consumer markets across Canada, Europe and Australia. Headquartered in Edmonton, Alberta, Aurora is a pioneer in global cannabis, dedicated to helping people improve their lives. The Company's adult- use brand portfolio includes Aurora Drift, San Rafael '71, Daily Special, Tasty's, Being and Greybeard. Medical cannabis brands include MedReleaf, CanniMed, Aurora and Whistler Medical Marijuana Co, as well as international brands, Pedanios, IndiMed and CraftPlant. Aurora also has a controlling interest in Bevo Farms Ltd., North America's leading supplier of propagated agricultural plants. Driven by science and innovation, and with a focus on high-quality cannabis products, Aurora's brands continue to break through as industry leaders in the medical, wellness and adult recreational markets wherever they are launched. Learn more at www.auroramj.com and follow us on X and LinkedIn. 

Aurora's Common Shares trade on the NASDAQ and TSX under the symbol "ACB".

Contact

For Investors: ICR, Inc. | aurora@icrinc.com                                   

Forward Looking Information  

This news release includes statements containing certain "forward-looking information" within the meaning of applicable securities law ("forward-looking statements"). Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements made in this news release include, but are not limited to, statements regarding the Company's supply agreement and relationship with SNDL, including but not limited to the contract term and expected value, expectations related to the supply of flower product from SNDL and the Company's focus on a balanced approach to operating a hybrid manufacturing network of in-house and third-party cultivation.

These forward-looking statements are only predictions. Forward looking information or statements contained in this news release have been developed based on assumptions management considers to be reasonable. Material factors or assumptions involved in developing forward-looking statements include, without limitation, publicly available information from governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Company believes to be reasonable. Forward-looking statements are subject to a variety of risks, uncertainties and other factors that management believes to be relevant and reasonable in the circumstances could cause actual events, results, level of activity, performance, prospects, opportunities or achievements to differ materially from those projected in the forward-looking statements. These risks include, but are not limited to, the ability to retain key personnel, the ability to continue investing in infrastructure to support growth, the ability to obtain financing on acceptable terms, the continued quality of our products, customer experience and retention, the development of third party government and non-government consumer sales channels, management's estimates of consumer demand in Canada and in jurisdictions where the Company exports, expectations of future results and expenses, the risk of successful integration of acquired business and operations (with respect to the Transaction and more generally with respect to future acquisitions), management's estimation that SG&A will grow only in proportion of revenue growth, the ability to expand and maintain distribution capabilities, the impact of competition, the general impact of financial market conditions, the yield from cannabis growing operations, product demand, changes in prices of required commodities, competition, and the possibility for changes in laws, rules, and regulations in the industry, epidemics, pandemics or other public health crises and other risks, uncertainties and factors set out under the heading "Risk Factors" in the Company's annual information from dated June 20, 2024 (the "AIF") and filed with Canadian securities regulators available on the Company's issuer profile on SEDAR+ at www.sedarplus.com and filed with and available on the SEC's website at www.sec.gov. The Company cautions that the list of risks, uncertainties and other factors described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such information. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law. 

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SOURCE Aurora Cannabis Inc.

FAQ

What is the value and duration of Aurora Cannabis's (ACB) new supply agreement with SNDL?

The supply agreement between Aurora Cannabis and SNDL is valued at $27 million and has a duration of three years with an option to extend.

Where will SNDL source the cannabis for Aurora Cannabis (ACB) under the new agreement?

SNDL will supply premium cannabis flower product grown at their indoor facility in Atholville, New Brunswick.

What recent performance milestone did Aurora Cannabis (ACB) achieve in Q3?

Aurora Cannabis reported record-setting growth in their international medical cannabis segment during the third quarter.

How does the new SNDL agreement fit into Aurora Cannabis's (ACB) manufacturing strategy?

The agreement aligns with Aurora's balanced approach to operating a hybrid manufacturing network that combines in-house and third-party cultivation.