This Cannabis Amalgamation Has Aurora Thrive-ing
Aurora Cannabis Inc. and Thrive Cannabis are the latest dance partners in the craft cannabis amalgamations happening across Canada. Aurora announced a $38 million deal of TerraPharma, Thrive’s parent company, on March 22, 2022. Thrive will also be eligible for up to $20 million in shares and/or cash if revenue targets are met within two years.
The move is another in a wave of larger companies buying smaller craft cannabis companies, which tend to have higher profit margins and high customer loyalty.
“Brands are moving too fast. The consumers are moving too fast,” said Aurora CEO Miguel Martin. “The only thing that’s really consistent right now is really good people, and Thrive has that in spades.”
Thrive says that this move won’t compromise the strong brand it’s built with its customers.
“We aren’t selling out,” said Thrive CEO Geoff Hoover. “This gives us an opportunity to increase the brand awareness, to bring new products to market to reach consumers that we could never reach before.”
In fact, Hoover will remain in charge of Thrive. He will also take over several Aurora brands including San Rafael, Drift, and Whistler Cannabis. From the sounds of it, all these brands will co-exist with the Thrive’s premium brands including Greybeard, though some Aurora brands may change.
“More things will change probably on Whistler and San Raf and Aurora Drift than we’ll change on Greybeard and Being (a Thrive oral strips brand),” Martin said about the cannabis amalgamation. “There are no style points for San Raf winning at the expense of Whistler winning at the expense of Greybeard, so there’s not that type of inherent tension.”
Craft Cannabis Amalgamation the Latest Trend in Canadian Cannabis – LPC
This is by far not the first cannabis amalgamation between larger licensed producers (LPs) and smaller craft cannabis companies. In October 2021, Aurora announced a craft cannabis partnership with North 40 Cannabis.
There have been other cannabis amalgamation examples as well. The newly formed Entourage cannabis play was a merger between WeedMD and CannTx. The Hexo/Zenabis deal was about positioning for the US market. The Tilray/Aphria deal was about positioning for global domination.
For the craft cannabis mergers though, the deals seem to be bringing both parties some key strategic advantages. The larger LPs like Aurora get the prestige – and profits – that come with the premium brands. The small craft cannabis producers get better access to markets. This is a real concern for many. For example, the Ontario Cannabis Store (OCS), the gateway to Canada’s largest market, has been seen as “killing” retail cannabis with pay to play and other approaches to shelf space that make it difficult for smaller cannabis companies to compete.
Meanwhile, retail cannabis stores are having their own issues in big cities like Toronto, where retail cannabis stores seeing thinning profit margins too.
None of this is surprising. Just months after legalization, some analysts predicted that cannabis industry consolidation was inevitable.
Will these strategic cannabis amalgamations help streamline the industry for better days ahead? That is certainly the hope.
Read the full Canadian Press story here
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