- Cam Battley, Aurora Cannabis‘ chief corporate officer, sat down for an interview at Business Insider’s Manhattan headquarters following Aurora’s earnings on Wednesday.
- Battley revealed what Aurora’s unique relationship with famed billionaire Nelson Peltz brings to the table, why they’re not rushing into any partnerships with CPG companies, and why they’re not bullish on cannabis-infused beverages.
Cam Battley is a busy man.
Coming off of Aurora Cannabis’s quarterly earnings call on Wednesday, the CEO’s destinations over the next two weeks include a trip to London for a cannabis conference, a pitstop in Toronto, where he lives with his family, a trip to Edmonton for a series of meetings at Aurora’s headquarters, and then it’s off to an "undisclosed" location in South America where he’s set to meet with government officials about opening up new cannabis production facilities.
Such is the life of a cannabis exec in 2019, said Battley.
As Aurora’s chief corporate officer and one of the most public faces of the Canadian cannabis behemoth, Battley sat down for an interview in Business Insider’s Manhattan offices on Wednesday afternoon.
He shed light on the company’s recent strategic partnership with famed investor Nelson Peltz, why Aurora isn’t bullish on cannabis beverages, and whether or not the company would pursue big acquisitions in the US in the near future.
The unique arrangement with Peltz — a hedge fund legend who’s worth a cool $1.6 billion — came about over a dinner in New York City.
"I think he was really just curious at first," said Battley. "He was interested in this new business that’s being born before our eyes."
After both parties hit it off over a dinner in New York City the casual advice became more structured: Peltz took a formal role as a strategic advisor to Aurora in March. He’ll be compensated handsomely, with 20 million in stock options that vest over four years.
"It’s really important because some people ask us, ‘oh, he’s an activist investor, is he trying to take over the company?’" said Battley. "No, his involvement is very different because this is not a mature industry where there’s stuff broken that needs to be fixed."
What excites Peltz the most, said Battley, is that Aurora is helping to invent a brand new global industry. "So there’s no cost-cutting to be done," said Battley. "He’s about helping us grow faster because we’re still so small compared to where we’re going to be in a very short number of years."
AP Photo/Richard Drew
One of Peltz’s first pieces of sage advice was not to rush into any major partnerships with a single company in the consumer packaged goods, beverage, or tobacco industries — unlike some other cannabis companies that have announced landmark deals in recent months
For one, Aurora’s value is increasing every quarter, said Battley, so it would be the most beneficial to shareholders to pump the breaks on giving up control over a large chunk of the company. Aurora was linked to rumors about a deal with Coca-Cola last year, though those talks never came to fruition.
And because of cannabis’s potential to disrupt many different industries as more jurisdictions legalize the plant, Battley said Peltz advised that Aurora should look to pursue partnerships with multiple companies across multiple different industries, rather than pigeonholing themselves too early.
Not following in Canopy’s footsteps — yet
While Aurora is moving slower than it’s peers on partnering with more established companies — both Canopy Growth and Cronos Group have landed significant investments from the alcohol and tobacco industries — that’s not to say Aurora isn’t evaluating similar types of deals.
Especially when it comes to entering the lucrative US market, said Battley.
Canopy Growth’s recent deal that would give it the right to buy US cannabis cultivator Acreage Holdings within seven-and-a-half years — provided the federal government legalizes cannabis or at least provides a policy framework for allowing these types of international cannabis corporations — sent shockwaves throughout the industry and spurred both analysts and reporters to ask whether Aurora would look at a similar transaction with a different US cannabis company.
"What Canopy did with Acreage has shown that’s another option on the table for the biggest cannabis companies," said Battley, though he declined to say whether or not Aurora has been in discussions with any US companies.
"We know we are going to be in the US market in a big way," said Battley. "If you want to be a global leader, you have to be in the US market."
Sticking to what they know works
On the home front, as Canada moves towards allowing THC vape pens, edibles, and beverages in retail stores this Fall, Battley said the company is taking its cues from the most mature recreational cannabis markets in US states like Colorado and California.
And that means that developing cannabis beverages will take a backseat to form factors, like vape pens, that they know sell well in legal markets.
"Take a look at the market share that cannabis-infused beverages have in consumer legal states," said Battley. "It’s typically around 2% right? So I’m not saying that consumer behavior won’t change, it’s just that it hasn’t yet. We can take a little longer to get into that segment."
On top of that, vapes are easier to produce than beverages and offer higher margins than other cannabis products.
"I really wish those who go into beverages first, I wish them luck," said Battley. "I want them to develop those segments. But we’re entering the segments first where the consumer behavior is already clear."
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