Aurora Cannabis closes its last production site in Denmark

Canadian producer Aurora Cannabis is closing its last facilities in Denmark and will resume European sourcing from Canada, a move that should help reduce costs.

This decision comes more than a year after the company sold its Nordic Sky facilities in Odense, also in Denmark, for around 5 million euros.

«This is not a reflection on our European activities, as they remain solid, with healthy margins and growth prospects,» the Aurora spokesperson told MJBizDaily.

«However, the Nordic site faced many unique challenges beyond our control that could not be overcome despite our best efforts.»

A complicated installation in Europe

This release ends a difficult period for Aurora in the Danish market. In early 2018, Aurora had envisioned creating Europe's «largest» medical cannabis producer in Denmark when it unveiled plans to become the second licensed cultivator to build a facility in the Scandinavian country after Canopy Growth.

The facility was to produce an impressive 130 tonnes of medical cannabis a year, far more than is currently demanded by the European market.

Germany, the Europe's largest medical cannabis market, In 2022, France imported only 25 tonnes of cannabis for medical or scientific purposes, an increase of 19 % on the 20,769 kilograms imported in 2021.

A few months before Aurora committed to Denmark in 2018, rival producer Canopy Growth Corp. unveiled plans to establish its own 4-hectare production site in Odense. Canopy eventually sold the facility to Australian company Little Green Pharma in 2021.

In a conference call with analysts on Wednesday, Aurora CEO Miguel Martin said the closure in Denmark was part of a savings plan of around C$40 million, to be achieved by March 31, 2024.

«We have taken the decision to close our Nordic production plant in Denmark and will supply [Europe] from our Canadian facilities, which have much lower unit costs and a much more reliable supply,» said CFO Glen Ibbott.

«We believe this will enable us to be even more competitive in a fast-growing European market.»

Mr Martin identified three «main» challenges for the Danish plant.

«First of all, the regulations around what would be traditional remediation of pathogens - whether it's powdery mildew or other things - in this facility have made it difficult to get the same yield and production that we get in Canada,» the CEO told analysts.

«Secondly, the size of these greenhouses didn't allow us to achieve the same production efficiency we get in our indoor facilities in Canada.»

Finally, Mr. Martin stated that European markets, «for whatever reason», consider Canadian products to be of better quality and more valuable to them.