- Focused on building companies through early-stage, opportunistic, and diversified investments in the cannabis space
- Spun off from Aurora Cannabis in late 2018
- Terry Booth, who helped build Aurora, now CEO
Australis Capital Inc (CSE:AUSA) (OTCMKTS:AUSAF) aims to build companies through early-stage, opportunistic, and diversified investments in the cannabis value chain in the US and abroad.
The Nevada-based company’s business and assets include investments in Cocoon Technology LLC, Body and Mind Inc, Green Therapeutics LLC, Quality Green, Folium Biosciences, and land assets in Washington state and Michigan.
Australis was spun out from cannabis behemoth Aurora Cannabis Inc (TSE:TSX:ACB) (NYSE:ACB) in September 2018 as its US investment vehicle. Aurora is not allowed to invest in US cannabis assets due to Toronto Stock Exchange and NYSE listing rules. Australis is therefore Aurora’s arm to establish a foothold in the US, before a potential US federal legalization shift.
As part of the new strategy to scale up its award-winning brands across the US and global cannabis markets, the company has acquired a 51% interest in cash-flow-healthy ALPS - the world’s premier design, construction management, commissioning, and post-commissioning consultancy for horticultural crops such as cannabis.
Australis has also gone through the process of acquiring a 100% interest of the outstanding membership interest in Nevada-based cannabis cultivator Green Therapeutics.
But the ALPS acquisition is central to the company’s growth blueprint, and as such, former Aurora CEO Terry Booth is now Australis' new CEO, taking over from Duke Fu, who had been serving as Interim CEO since November 2020. Fu now is COO, focusing on driving organic growth.
With a number of existing customer relationships and significant contracts, Australis said ALPS is expected to bring material revenues to the company and is also anticipated to be immediately accretive to the company’s results.
Australis plans to leverage ALPS's customer relationships, whereby customers, in return for ALPS developed intellectual property, will also grow Australis' portfolio of award-winning genetics, selling these back to the company at cost plus a relatively small mark-up.
Booth built Aurora Cannabis from a late starter to a multi-billion dollar cannabis industry leader and is a seasoned entrepreneur, capital market savvy, with a deep grasp of the requirements to be successful in the global medical and recreational markets.
How is it doing:
Australis' majority-owned subsidiary ALPS completed an agreement in May with the University of Alberta to provide a business case and feasibility study to establish a research and development greenhouse for the agricultural and life environmental sciences faculty. The objective is to establish a leading agricultural infrastructure focused on innovation to help attract the best and brightest horticulture students who will lead the industry in the years to come.
ALPS is also engaged in a number of other projects incorporating innovation and new intellectual property. One such project is with a Scandinavian grower of tomatoes and cucumbers under which ALPS has developed an ultra-precise environment control system, significantly improving propagation success rates and therefore economic output. ALPS retains the rights to the intellectual property developed and will be able to use this technology in the cannabis sector.
Meanwhile, Green Therapeutics recently took over the operations of a Nevada-based cultivator and producer of premium cannabis products after the companies announced a management agreement in April. Under the terms of the deal, GT operates the cultivation facility and produces products sold under the GT and Mr Natural brands. Harvest has begun, which will result in an expansion of the volume of GT branded products available in Nevada dispensaries, the company said.
GT recently signed an agreement with Nevada retail brand Thrive Cannabis Marketplace for its products to be carried by the chain. Thrive currently operates four dispensaries in Nevada, and the company expects to expand to eight locations before the end of the year.
Australis said Green Therapeutics continues to turn out exceptional, high-end products. Three of the company's cultivars, sold under the GT Flowers brand, have tested for high THC potency with exceptional terpene profiles.
The high quality of these products, due to Green Therapeutics' science-based approach to cultivation, is reflected in its products consistently selling out in the Nevada adult-usage space in which the company has achieved a 52% penetration rate. The firm operates an 8,000 square foot facility.
Green Therapeutics is also in the process of operationalizing assets in Missouri and Oklahoma. The company has a manufacturing license in Oklahoma and a 25% interest in an extraction and processing license in Missouri.
On the financial front, Australis revealed in April that it expects revenue for the fiscal year ended March 31, 2021, to have doubled year-over-year. A big reason for that, the company said, is ALPS, even though the deal was closed less than a month before the fiscal year ended.
Inflection points:
- Discussions with potential partners to enter the now-legal New York market
- Green Therapeutics US expansion
- Execution of ALPS and Green Therapeutics deals
Following the legalization of recreational adult-use cannabis in New York, Australis CEO Terry Booth discussed the company's future in the state.
“We intend to play a leading role in the eastern US market, which will take a variety of forms,” Booth said in April. “We initiated discussions and negotiations with potential partners over 8 months ago in anticipation of this significant advancement in the American adult usage cannabis market. We will now accelerate these negotiations to determine the opportunities that these potential partners bring to strengthen our applications and negotiations.”
He added: “We also applaud the social equity components of the new legislation in New York. Diversity and Inclusion will not just be a checkmark on our applications, it will be a pillar of our corporate culture. We also believe the cannabis industry owes a debt to advocates, activists, innovators and early adopters. This legislation will enable many of these and otherwise disadvantaged groups to participate in the New York and eastern US markets, which we strongly believe is in the best interest of both the industry and society at large.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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