A longstanding executive for a foundational publicly traded Canadian cannabis firm is set to return to the space as CEO of a company looking to shift strategies.
As founder and CEO, he led Aurora Cannabis (NYSE:ACB,TSX:ACB) through the initial green rush cycle of hype and growth for Canadian cannabis names, and then through various downturns caused by poor financial results in the overall industry and difficulties with the Canadian legal marketplace rollout.
The conclusion of his time at Aurora represented a change in the landscape of leading executives for Canadian cannabis companies. But Booth never saw it as the end of his time in the industry. “I probably didn’t really leave the cannabis space, I think I was retired for about six hours,” he said.
Now Booth is expected to become CEO of Australis after joining an investor group that challenged the executives formerly in charge of the company in an all-out public battle.
The executive opened up to the Investing News Network (INN) about his time away, lessons learned from the downgrade in cannabis investing and exactly where he wants to see Australis in the future.
Where does Booth want Australis to go in the future?
What exactly can investors expect of a new Booth-led cannabis company? Nothing resembling Aurora, he said. The future for Australis will have a different business path and potentially a name change.
What Booth wants the company to become is a US cannabis player that is involved in the buildout of facilities for other operators; he also wants Australis to have deals in place that will allow it to secure cannabis from these operators.
“We’re not building an Aurora 2.0 — we’re not going to build a bunch of big facilities and then cultivate cannabis,” he explained to INN. “But we are going to build big facilities for others and have them cultivate a certain amount of cannabis assigned to us — that would be 5 percent or 10 percent depending upon the size of that facility.”
Building expertise will come from greenhouse facility design and consulting firm Aurora Larssen Projects, otherwise known as ALPS, which Booth said he joined last year after Aurora divested its stake in the firm.
Australis is currently in the process of absorbing ALPS, a transaction that will confirm Booth’s appointment as leading executive. Additionally, the firm is purchasing Green Therapeutics, a Nevada-based company producing branded cannabis products.
The former Aurora CEO told INN he has been able to look back on shortcomings during his time at the helm of the cannabis producer — pitfalls he doesn’t want to repeat now with Australis.
One of Booth’s biggest reflections is that acquisitions of distressed assets shouldn’t be forced just because an idea sounds good on paper. This concept, he said, will be a guiding principle for the future strategy at Australis. According to the executive, any acquisitions or deals the company makes will be dictated by positive cash flow or positive EBITDA results.
“I want to stay away from being too diluted,” Booth said of his desire to prevent Australis from needing to rush and get money at a low cost from the market, as was the case with Aurora at times.
What’s the backstory between Australis and Aurora?
Booth’s return as Australis CEO is mirrored by his return of sorts to the Aurora corporate family.
Australis is a cannabis company originally launched in 2018 by Aurora as a spin off designed to explore the market for investing opportunities in various geographies, including the US market.
The two companies have kept a distance since Aurora’s stance with securities regulators cannot be compromised by way of doing direct business in the federally illegal US cannabis market.
“We were supposed to be their big brother, yet it didn’t really occur that way,” Booth told INN.
He said after Australis completed a previous deal in Nevada, Aurora was set to help with the buildout of a facility space up until Aurora’s advisors shut down the notion of participating in the US marketplace in any capacity. “We (could) only be an advisor to Australis, and we weren’t really tapped on the shoulder very much,” Booth said.
The downturn in operations led to what Booth called mistakes for Australis. The company began exploring fintech business opportunities in 2020, when a group of investors banded together to challenge its management team.
After weeks of escalation, Australis saw its future change when the board nominees propped up by the company’s previous management bowed out. This led to a victory for the dissident group known as the Concerned Shareholders of Australis Capital, which had support from Booth.
Can Australis strike up a business relationship with Aurora?
Despite the distance between Aurora and Australis, the two companies are still linked by way of a set of warrants held by Aurora, which won’t expire until September 2028.
In its most recent quarterly report, Aurora restated its current position in regards to Australis. Company documents show Aurora still holds 22.6 million warrants exercisable at a price of $0.20 per share; in total, these warrants equate to around a 20 percent stake in Australis.
The Canadian producer also reaffirmed it cannot act on these warrants until US federal law permits all of Australis’ business operations, or until Aurora receives permission to act on them from securities regulators. The latter would likely not happen without federal legalization.
But where exactly does that leave the current business relationship, if any at all, between the two corporations? Booth told INN he wants there to be one and said he is looking forward to potential discussions with Aurora.
“Some people may see that warrant thing as a hangover, but I intend to nurture the relationship with Aurora,” Booth said.
The executive reiterated that for any action to take place with the warrants, cannabis will have to be deemed legal in the US. But in the future, if there is a change in policy in the US market and the warrants came into play, he wouldn’t turn down the opportunity to work with Aurora.
“A lot of factors would say that they wouldn’t do it. And a lot of reasons that I wouldn’t be bothered if they did,” Booth said. “If you know me, you know I’ll look at any deal. You know I don’t harbor resentment (toward) anybody. Sure, there’s some people that pissed me off at Aurora, they still do, but most of them have left after I left. I don’t expect that would impede me or them from doing business together.”
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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