5 Cannabis Industry Myths That Aurora Cannabis Wants to Clear Up
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Aurora Cannabis (NYSE: ACB) claims the largest funded production capacity among Canadian cannabis producers. It's the second-largest cannabis producer in the world in terms of market cap, and operates in 24 countries spanning five continents. It's probably fair to say that the Aurora executives have expertise in the cannabis industry.
That's important to note because there are a few things people believe about the cannabis industry that Aurora thinks are incorrect. Vice president of investor relations Marc Lakmaaker spoke at a virtual investor conference on Tuesday hosted by OTC Markets. He specifically mentioned five myths about the cannabis industry that Aurora wants to clear up.
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1. A supply glut is on the way
You've heard it and I've heard it: A supply glut is coming for the Canadian cannabis market. Lakmaaker acknowledged in his comments on Tuesday that there's plenty of talk about a looming supply glut. But he stated point blank, "We're not really seeing it." Lakmaaker said a lot of companies projected production capacity that hasn't materialized yet.
More importantly, he emphasized that Aurora is looking at a global cannabis market that's far larger than Canada alone. Lakmaaker mentioned that Aurora CEO Terry Booth likes to say that the thing that keeps him up at night is not being able to supply enough product to meet the growing demand globally. Aurora is putting its money where its mouth is on this front: The company announced in April that it's boosting production capacity at its Aurora Sun facility.
2. Canadian medical cannabis isn't a growth market
Many people assumed that the Canadian medical cannabis market would be flat at best or even decline following the legalization of adult-use recreational marijuana. Lakmaaker said unequivocally that isn't the case at all.
He noted that there are significant financial incentives for patients to stay within the medical system in Canada instead of obtaining cannabis through retail channels. Lakmaaker added that there are a growing number of private companies offering coverage for medical cannabis. Sure, the adult-use recreational market is much larger, but investors shouldn't overlook the continued growth opportunities in Canada's medical cannabis market.
3. Retail cannabis growth is sluggish in Canada
Speaking of the adult-use market, Lakmaaker mentioned that the media has focused on low retail cannabis sales growth in Canada. Scotiabank even slashed its revenue outlook for Aurora's main rival, Canopy Growth, on concerns about the retail environment in Canada.