Aurora Cannabis hits the “reset” button with 500 layoffs

The former darling of investors is blaming the botched rollout of retail sales in Ontario as one reason for corporate shakeup

First crop of plants at Aurora Cannabis’s Aurora Eau, in Lachute, Quebec in July 2019. (CNW Group/Aurora Cannabis Inc.)

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There have been rumblings since the new year that 2020 would be make-or-break for some of the country’s biggest cannabis companies.

On Thursday, Aurora Cannabis, once a darling of investors in the cannabis industry, announced  the slashing of 500 jobs nationwide as part of a major corporate shakeup.

The announcement included news of the departure of long-time CEO Terry Booth. Aurora also announced the additions of Lance Friedmann and Michael Detlefsen, two veterans of the packaged food industry, to its board.

“We view this opportunity not only as a reset of our company, but as a reset of our relationship with consumers and investors,” said the company’s CFO Glen Ibbott, in a conference call with investors late Thursday afternoon.

“These changes represent a fundamental shift in focus,” added newly appointed interim CEO Michael Singer. “We believe Canada is a solid market with lots of potential, but one that will take time to develop.”

Singer will take over the role of CEO until a permanent replacement is found. Cam Battley, who was widely-assumed to be the successor to Booth, left the company just weeks ago.

“Terry deserves an immense amount of credit as an icon and a visionary in the cannabis industry,” says Singer. “The next leg of our journey will be led by a CEO with a different skill set.”

The list of layoffs will hit the highest rungs of the company. Some 25 per cent of the 500 positions to be cut are from the corporate side. (The company declined to offer any further information about other jobs being cut when contacted by CannCentral.) The company is also reducing spending across the board — scrapping planned IT projects and travel and entertainment costs, for instance.

The general push towards austerity is meant to “install a culture of financial discipline,” says Ibbott.

While painting a picture of rough waters ahead – “We’re not flush with cash,” says Ibbott – Aurora still believes it can survive long-term. But first, it will have to overcome a ballooning overhead. And the fact the company was forced to take a massive $800 million write-down on its assets.

There was a long list of reasons offered by the company for the shakeup. Among them: the botched roll-out of retail sales in Ontario, and the slow development of global markets in South America and Europe. A general glut of supply that hit the market in mid-2019 was also a factor.

But the poor performance of the company’s mid-potency products, even at discount prices, was also blamed.

Reading between the lines, Aurora’s predicament is one that other Licensed Producers will likely be facing this year. Short-term windfalls that everyone expected from legalization simply haven’t materialized, and the hunt for global markets to fill the gap has been slow to catch fire.

Aurora’s stock took a hit on Friday, with the price down more than 15 per cent by mid-day.

Meanwhile, Booth didn’t offer much on his departure in a prepared statement. He said that “Aurora has built a leading position in the global cannabis industry.” That used to be true. Aurora was the largest cannabis company on the planet as recently as 2018.