Aurora Cannabis is hot on Europe and gummy candies, but sees the U.S. pot market as a big question mark.
As recreational marijuana moves beyond buds, and countries besides Canada mull legalization, cannabis companies have a lot of potential roads to travel as they seek to grow.
Entering the U.S. Booth said in the conference call Wednesday that even if the U.S. were to legalize marijuana federally today, it would take years before the country would be able to ramp supply and solve the issues that Canada has grappled with since recreational pot became legal there in October. Booth did say that some of the American weed companies will have a “first mover advantage” if the U.S. legalizes pot and that “there would be some cherry-picking to do on the [multistate operator] side.” The valuations on those companies would inflate significantly if the U.S. federal government legalized pot, but he said it’s a mistake to value those companies based on their retail presence.
Unlike rival Canopy Growth, which has taken a $4 billion investment from Corona beer-maker Constellation Brands Inc. STZ, -0.17% , Aurora executives say the company is watching beverages closely but has not made a significant commitment to develop beverage products. Battley said it would probably take time, marketing and experience to change consumer tastes and grow the market beyond “something like 2% or under” in the U.S.
European cannabis market When asked by an analyst in the conference call about Aurora’s growing operations across the pond, Battley said: “Let me start by telling you how much we love Europe. Europe is a market where there is very little competition, there’s only one producer in Europe right now. It’s one of eight that’s European Union GMP-certified … very limited competition, very limited supply.
“I lose sleep over being able to supply this global market,” Booth said in the conference call. “The European market is going to go nowhere but up, maybe not this quarter on the hockey stick — but we’ll start shipping to Europe in bulk before too long, we’re the first to sell high-value derivatives in Germany which are starting to get traction with the doctors … they still will take whatever we can give them.
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