Things Just Got Real

I was recently interviewed, along with Cam Battley, CCO of Canada-based Aurora Cannabis, by James West on “The Midas Letter,” a Canadian digital business channel for cannabis, crypto and technology stocks. (You can watch the interview at bit.ly/midas-letter.) It got me thinking about Aurora and its recent business dealings, including Aurora’s investment in and partnership with private-sector liquor retailer Alcanna. According to Aurora’s April announcement:

“The companies have reached a license agreement whereby Alcanna has been given exclusive rights to open retail cannabis stores under the brand name ‘Aurora’ across Canada. … In February, Aurora announced its strategic investment in Alcanna (formerly Liquor Stores NA), the Edmonton, Alberta-based retailer of alcoholic beverages with 229 retail outlets in Western Canada and Alaska, with a view to establishing a leading brand of cannabis retail outlets.”

Alcanna is one of the three largest private sector alcohol retailers in North America and by far the largest private sector alcohol retailer in Canada, according to an August press release issued by the company.

Aurora has a major distribution network behind it now—Alcanna has been dealing with regulatory issues around alcohol, which are as close as you can get to the cannabis market’s regulatory nuances, for many years. In fact, the expansion into the cannabis market drove Alcanna’s strategic name change—the new name combines alcohol and cannabis, as the company’s website explains.

“We have deep capabilities that will enable us to rapidly develop a large network of well-located cannabis stores, delivering a unique customer experience from October 17, 2018, onwards,” commented James Burns, Alcanna’s CEO, in the company’s August statement.

Aurora already established itself in the U.S. cannabis market and recently created a spin-off company, Australis, to house its American assets. Aurora has “a funded capacity in excess of 570,000 kg per year and sales and operations in 14 countries across five continents,” as stated in the Alcanna press release. No doubt Aurora and Alcanna will be rapidly expanding across the U.S. as soon as federal legalization occurs.

The U.S. federal prohibition on cannabis is enabling this to happen. By the time the U.S. government makes a sensible legislative move on cannabis—medical or adult-use—the U.S. will be so far behind the global cannabis companies that the catch-up period for most U.S.-based companies will be substantial. (Not to mention medical cannabis research and the money already flowing beyond our borders.)

If you are a U.S. grower, you might think it’s a blessing to have this period of federal prohibition to build your businesses, but other countries will see it as their blessing as well—more time to establish not only their own brands, but to facilitate deals such as the Aurora-Alcanna partnership and begin building a global production and distribution network.

The future of the cannabis industry holds room for every type and size of business. But if you don’t have one eye on what’s happening around you, you are likely to get swallowed up by the swelling wave of big business. Reality is reality, like it or not. Now is the time to think strategically about your place in the rapidly advancing global cannabis industry and to establish a foothold in your market(s).