Aurora Cannabis, one of the world’s largest cannabis producers, has announced that it has acquired the remaining 90% stake in MedReleaf Australia, a leading medical cannabis company in Australia, for $50 million in a cash-and-share deal. The transaction, which was completed on February 9, 2024, strengthens Aurora’s position in the rapidly growing Australian market and its global cannabis leadership.
MedReleaf Australia: a success story in medical cannabis
MedReleaf Australia was founded in 2017 by Russell Harding and Nathan Davis, who had a vision to connect clinicians with patients nationwide and positively impact thousands of lives with medical cannabis. The company holds licenses from the Federal Government’s Office of Drug Control (ODC) to import, cultivate, and manufacture medical cannabis products. It also has a strong distribution network across Australia, serving over 20,000 patients and 1,000 pharmacies.
MedReleaf Australia has been a long-term partner of Aurora Cannabis since its inception, sourcing its products from the Canadian giant, which already owned 10% of the Australian firm. MedReleaf Australia generated net revenue of $40 million in the year to December 31, 2023, and was operating cash flow positive. According to NostraData, a research firm, MedReleaf captured almost one in five medicinal cannabis sales in Australia in 2023.
Aurora Cannabis: a global cannabis leader
Aurora Cannabis, based in Edmonton, Canada, is a leading cannabis producer and distributor, with operations in 25 countries across five continents. The company focuses on both medical and recreational cannabis markets, offering a range of products, services, and technologies, such as patient education, clinic counseling, home hydroponic cultivation, extraction, delivery systems, and hemp-based food health products.
Aurora Cannabis has a history of strategic acquisitions and partnerships, such as with CanniMed, Whistler Medical Marijuana Co., and Pedanios in Germany. The company also sold its 12.5% stake in Cann Group, another Australian cannabis producer, in 2020. Aurora Cannabis reported net revenue of $278 million for the fiscal year ended June 30, 2023, and aims to deliver positive free cash flow in 2024.
What does the deal mean for both parties?
The acquisition of MedReleaf Australia by Aurora Cannabis is a win-win situation for both parties, as it offers several benefits, such as:
- Market expansion: The deal gives Aurora Cannabis full ownership of one of the leading medical cannabis companies in Australia, which is a fast-growing and lucrative market. According to Prohibition Partners, a consultancy firm, the Australian medical cannabis market is expected to reach $1.5 billion by 2025. The deal also enhances Aurora’s global presence and reach, as it can leverage MedReleaf’s distribution network and customer base in Australia and beyond.
- Product diversification: The deal allows Aurora Cannabis to offer a wider range of products and brands to the Australian market, as it can introduce its portfolio of high-quality cannabis products, such as oils, capsules, sprays, and vapes, to complement MedReleaf’s existing offerings. The deal also enables MedReleaf Australia to access Aurora’s innovative technologies and services, such as extraction, delivery systems, and home cultivation.
- Cost efficiency: The deal creates synergies and economies of scale for both parties, as they can reduce operational costs and increase margins by streamlining their supply chains, production processes, and marketing strategies. The deal also reduces the risk of supply disruptions and price fluctuations, as Aurora Cannabis can ensure a consistent and reliable supply of cannabis products to MedReleaf Australia.
- Growth potential: The deal positions both parties for future growth and profitability, as they can capitalize on the increasing demand for medical cannabis in Australia and other regions, such as Asia-Pacific and Europe. The deal also opens up new opportunities for innovation and collaboration, as both parties can leverage their respective expertise, resources, and networks to develop new products, services, and markets.
What do the leaders say?
The leaders of both Aurora Cannabis and MedReleaf Australia expressed their excitement and optimism about the deal and its implications. Here are some of their statements:
- Miguel Martin, CEO of Aurora Cannabis: “This transaction marks a strategic milestone in Aurora’s global cannabis leadership and demonstrates our commitment to investing in markets that offer opportunities for sustainable and profitable growth. We are excited to solidify our position in this rapidly growing market and the opportunity this transaction presents to us in accelerating our plans to deliver positive free cash flow in the calendar year 2024.”
- Russell Harding and Nathan Davis, co-founders of MedReleaf Australia, say: “We’re proud to have built one of Australia’s leading medical cannabis companies, thanks to our main supplier, Aurora, dedicated investors, and dynamic team. Through our vision, we’ve connected clinicians with patients nationwide, positively impacting thousands of lives. This transaction marks an important step for MedReleaf Australia’s ongoing growth, as we believe medical cannabis is now mainstream medicine, and we’re grateful to be part of that story.”