Aurora Eyes $55 M Deal To Buy 17.6% Stake In Organic Marijuana Grower

Some Canadians blame addiction on marijuana ahead of legalization
Photo shows Canadians lobbying for legalization of marijuana. (File image via Reuters)

Aurora Cannabis Inc (ACB.TO) is planning to spend $55 million to buy a 17.6 percent stake in a privately-held marijuana grower Green Organic Dutchman Holdings, the company said on Friday.

The deal is expected to be Aurora’s second investment as the country moves on to legalize marijuana in the summer of 2018. This making it the first developed nation to do so.

So far, Aurora has signed deals to acquire an initial minority stake in The Green Organic Dutchman Holdings Ltd. (TGOD) and to purchase up to 20 percent of the marijuana grower’s annual cannabis production, the Canadian Press reported.

Meanwhile, Aurora will also have the option to increase its ownership interest to 51 percent once TGOD meets certain corporate, operational, construction and financial milestones. TGOD is building a high-technology greenhouse in Valleyfield, Que., where it owns a 30-hectare property.

Canadian Aurora Cannabis Inc (ACB.TO) is planning to spend $55 million to buy a 17.6 per cent stake in privately-held marijuana grower Green Organic Dutchman Holdings.
Canada spends as much on marijuana as wine. (Image via AP)

What does the contract entail?

The supply contract gives Aurora the right to purchase up to 33 percent of the production at the TGOD’s annual production of cannabis from its Ancaster, Ont., and Valleyfield facilities. This is if it increases its ownership interest to 31 percent.  

Under the proposed supply agreement, the Vancouver-based Aurora will also have the right to purchase up to 20 percent of TGOD’s annual production of cannabis from the two facilities.

The announcement comes after Aurora said on Thursday that it signed a joint venture with Danish tomato and pepper producer Alfred Pederson & Son to make and sell cannabis in Europe, BNN reported. 

Aurora and rivals Canopy Growth (WEED.TO 3.99%) and CanniMed Therapeutics (CMED.TO 6.44%) are competing heavily for market share in Canada.

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