Aurora Cannabis Faces Class-Action Lawsuit, Closing of Edmonton Facility

The amended civil suit, filed in a U.S. federal court, alleges that the company employed a fraudulent scheme to inflate one of its 2019 quarterly earnings results.

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September 23, 2021

Canadian cannabis giant Aurora Cannabis is grabbing headlines this month due to a class-action lawsuit and news that the company will shutter its Aurora Polaris facility in Edmonton, Alberta.

The suit, originally filed in late 2019 and amended in a U.S. District Court in New Jersey on Sept. 7, alleges that Aurora employed a fraudulent scheme to inflate one of its 2019 quarterly earnings results. This scheme, the plaintiffs claim, involved Aurora selling millions of dollars’ worth of cannabis back to itself through Radient Technologies, an Edmonton-based cannabis extraction company that Aurora had “significant influence over,” according to the complaint.

Aurora has a 12% ownership stake in Radient Technologies, as well as a seat on its board, as noted in the complaint.

In a June 2019 deal with Radient Technologies that “lacked commercial substance,” according to the complaint, Aurora allegedly sold $21.7 million worth of dried cannabis to Radient Technologies and then repurchased that same amount of product back from the company in a scheme that the plaintiffs claim artificially inflated Aurora’s 2019 fourth quarter adjusted earnings.

The lawsuit claims that Aurora then continued to misrepresent the true condition of the business, “causing the prices of Aurora’s common stock to be artificially inflated,” according to the complaint.

Aurora’s stock has since plunged by more than 90% since mid-2019, according to a BNN Bloomberg report.

The complaint claims that Aurora has violated the U.S. Exchange Act and requests a trial by jury.

A spokesperson for Aurora told Cannabis Business Times that the company does not comment on legal matters, but said, “We maintain our standard of business practice is in accordance with all relevant securities law and fulfill any obligation to respond accordingly.”

Meanwhile, the company announced Sept. 22 that it will shutter its Aurora Polaris facility in Edmonton in an effort to consolidate operations, according to a CBC report.

“While we’ve made substantial progress transforming Aurora, the company continues to make tough yet responsible changes to further optimize our business,” the company spokesperson said. “That is why Aurora announced the difficult decision to streamline our operations in Edmonton, Alberta. While our Aurora Sky facility will continue to operate, we will be closing Aurora Polaris.”

The nearly 30,000-square-foot Aurora Polaris facility housed product manufacturing, warehousing and distribution operations, CBC reported, adding that the property, which is adjacent to the Aurora Sky facility at the Edmonton International Airport, cost an estimated $50 million to build.

Medical cannabis distribution from the Aurora Polaris facility will move to the company’s adjacent Aurora Sky facility, while manufacturing from this site will move to the Aurora River facility in Ontario.

“Our corporate office will continue to be located in Alberta and we remain committed to the province and Canada,” the spokesperson said.

Eight percent of Aurora’s global workforce will be impacted by the closure of the Aurora Polaris facility, CBC reported.

“Employees affected by this change will be fully supported by the company and we thank them for their valuable contributions,” the spokesperson said. “We remain committed to our patients and consumers and will continue meeting their needs with our realigned network of core sites.”

RELATED: Aurora Cannabis Breaks Ground on Production Facility at Edmonton International Airport Amidst Canada’s Expanding Industry

Aurora announced in June 2020 that it would cease operations at five facilities, CBC reported, including Aurora Prairie in Saskatchewan, Aurora Mountain in Alberta, Aurora Ridge in Ontario, and Aurora Vie and Aurora Eau in Quebec.

“This decision was not taken lightly,” the spokesperson said regarding the company’s latest closure in Edmonton. “After painstaking review and thorough consideration, we are taking the necessary steps to strengthen our core operations to meet current and future demand. We aspire to be a leaner, more agile organization that keeps pace with our competition and is on a path to profitability. We believe these changes are imperative for our future success."

Amended Complaint in re AUR... by sandydocs