Aurora Cannabis has acquired 100% of both BC Northern Lights Enterprises Ltd. (BCNL) and Urban Cultivator, leading companies in the production and sale of proprietary systems for the safe, efficient and high-yield indoor cultivation of cannabis, and in state-of-the-art indoor gardening appliances for the cultivation of organic microgreens, vegetables and herbs in home kitchens. BCNL and Urban Cultivator, which have been operating for 16 years and 7 years, respectively, are each growing strongly and, combined, are tracking to generate more than $5 million in revenues annually. Both companies are headquartered in Surrey, British Columbia, according to a press release.
These transactions are an important step in Aurora's strategy to serve the home gardening market in Canada for patients who choose to grow their own medical cannabis, and ultimately for adult consumers who choose to grow their own after Canada's federal government legalizes adult usage, which is anticipated by July, 2018. As of August 21, 2017, 10,547 Canadians were registered to grow either their own cannabis or as designated growers for others. The number of home cannabis cultivators is expected to grow as a result of continued processing of applications by Health Canada, with further expansion anticipated subsequent to legalization of cannabis for adult-use, with a proposed limit of four plants per household. While the ultimate number of home growers is anticipated to be limited relative to the overall size of the market, it represents very significant upside potential for BCNL to grow its customer base and market share.
The total consideration in exchange for the acquisition of BCNL and Urban Cultivator is $3.85 million payable in cash on closing, subject to customary working capital adjustments; $0.5 million of Aurora common shares and share purchase warrants issued on closing; and up to a further $4 million of future consideration based on the achievement of certain pre-established EBITDA performance milestones related to BCNL and Urban Cultivator operations.
