Cannabis grower declares BC strike, cyberattack could result in $3 million in lost revenue

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Aurora Cannabis Inc. says revenue could hit $3 million due to a cyberattack that took down Ontario pot distributor and a strike that halted deliveries to BC marijuana stores .

Glen Ibbott, chief financial officer of the Edmonton-based cannabis company, offered the estimate during an earnings call on Tuesday, where he said he expects both disruptions to feature in next year’s results. Aurora’s quarter, but do not push back profitability targets.

The Ontario cyberattack occurred on August 5 and targeted Domain Logistics, the company behind the Ontario Cannabis Store’s third-party distribution center. While the attack was investigated, the jar distributor stopped shipping product to all 1,300 stores across Ontario and with nowhere else to go, many stores faced a decrease in supplies.

The ramifications of the attack lasted about two weeks, Aurora general manager Miguel Martin said on the same call as Ibbott.

“They’ve done an incredible job of getting things back on track,” he added.

But he called BC’s hiatus “meaningful”.

The unrest in the western province began on August 15, when the British Columbia General Employees Union, which represents about 33,000 public service workers in the province, set up picket lines to fight for better wages.

Retail liquor and cannabis stores weren’t part of the action, but Burnaby’s customer service center cannabis division was, so orders stopped coming out.

The province was in the process of initiating a program allowing pot shops to source directly from licensed producers, but the program had not started, so like in Ontario, there were no other options for s to supply. Many stores had to close and lay off staff as supply dwindled and the strike continued.

While both disruptions may affect Aurora’s revenue, the company faces even greater challenges in a 30-year high rate of inflation and an illicit market that has barely been diminished by the legalization of cannabis.

Aurora will rely on international medical cannabis markets in Europe, Australia and Israel to “insulate” itself from the current economic climate, Martin said.

“We believe the cannabis growth story will center on international medicine and recreation over the next few years,” he said.

“Right now, we think there are around 150,000 patients in Europe alone, and if the countries that have so far legalized medical cannabis achieve levels of adoption similar to Canada – one percent of the adult population – the patient pool could expand to 3.5. millions of people.

Martin’s remarks came as Aurora’s net loss widened to $618.8 million in its latest quarter as it recorded $505.1 million in impairment charges.

The fourth quarter net loss was even larger than the $134 million net loss recorded in the same period last year. The company attributed the impairment charges to “changes in cannabis market conditions and the current capital market environment, including higher borrowing rates and lower exchange rates.”

Its net revenue for the quarter ended June 30 was $50.2 million, down 8% from $54.8 million in the fourth quarter of 2021.

Consumer cannabis was the hardest hit of all its revenue streams, falling 35% year-over-year.

However, Aurora’s medical cannabis net revenue was up a modest 4% year-over-year, and the number of kilograms of pot sold across all categories increased 16% over the same period.

Aurora’s results follow several quarters of major changes, including plant closures, layoffs and acquisitions, which the company hopes will help it realign its operations to meet current demands.

“We made incredible strategic progress over the year,” Martin said.

“We are on track with our transformation plan and we are very optimistic about the future of the business.”

Feature Image: Members of the British Columbia General Employees Union picket outside a facility of the BC Liquor Distribution Branch, in Delta, British Columbia, Monday, August 15, 2022. Cannabis stores in British Columbia Britons say they are closing their doors and laying off staff after the strike prevented the province’s pot distribution center from dispatching its products early last week. THE CANADIAN PRESS/Darryl Dyck

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