Aurora Cannabis is shutting down five smaller production facilities as part of a corporate transformation plan over its next two quarters, with the goal of centralizing production and manufacturing at “larger scale and highly efficient sites.”

Aurora’s decision is the latest in a trend that has seen large Canadian producers mothballing excess facilities.

Some examples include:

• Canopy Growth closing two British Columbia greenhouses.
• Hexo completing the sale of a large greenhouse it acquired from Newstrike.
• Aurora Cannabis selling an Ontario greenhouse at a discount.
• Tilray closing an Ontario facility.

As far back as 2017, Canadian producers had bankrolled more than enough canopy to meet demand for the recreational market, but some publicly traded companies continued to build and buy more cultivation space in the ensuing years.

Aurora’s affected facilities are:

• Aurora Prairie in Saskatoon, Saskatchewan
• Aurora Mountain in Mountain View County, Alberta
• Aurora Ridge in Markham, Ontario
• Aurora Eau in Lachute, Quebec
• Aurora Vie in Pointe-Claire, Quebec

In a press release issued Tuesday, Aurora said parts of the Aurora Vie facility “will remain operational to allow for the manufacturing of certain higher margin products.”

Production and manufacturing will eventually be centralized at the Aurora Sky facility in Edmonton, Alberta, the Aurora River facility in Bradford, Ontario, the Whistler Pemberton facility in Pemberton, British Columbia, and the Polaris facility in Edmonton, Alberta.

“As part of the transition, the Company also intends to immediately ramp up cannabis production at its Nordic facility in Europe from which it believes can adequately service the European market with EU-GMP certified product,” Aurora said.

The future of the closed facilities has yet to be determined, according to Aurora spokeswoman Michelle Lefler.

“At the time of facility closures, we will evaluate next steps in accordance with fulfilling shareholder obligations,” she wrote in an email to Marijuana Business Daily.

Aurora’s cuts also include layoffs of production and administrative employees.

Selling, general, and administrative staff will be cut by about 25%, “most with immediate effect,” and production staff will be reduced by about 30% over the next two quarters.

The layoffs will affect approximately 700 Aurora staff, according to Lefler.

Aurora said the job cuts “include a restructuring of the executive leadership team and the recently announced retirement of President Steve Dobler.”

Details of the executive restructuring were not provided. Former Aurora CEO Terry Booth stepped down in February.

The facility closures come with asset impairment charges worth up to CA$60 million in Aurora’s current quarter, the company said.

Aurora also plans to record a CA$140 million charge for “the carrying value of certain inventory, predominantly trim, in order to align inventory on hand with near term expectations for demand.”

“Both the Canadian facility rationalization and inventory revaluation are expected to improve gross margins and accelerate our ability to generate positive cash flow,” said interim CEO Michael Singer in the press release.

Aurora reported a net loss of CA$137 million in its most recent quarter.

Aurora trades as ACB on the New York Stock Exchange and the Toronto Stock Exchange.

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Originally posted on via Cannabis Industry News