Aurora Cannabis Inc (TSE:ACB) (OTCMKTS:ACBFF) (FRA:21P) CCO Cam Battley discusses Aurora Sky, Aurora Sun, Aurora Frost, and the rapid pace of acquisitions and the overarching logic behind the Aurora’s global penetration scheme.

TRANSCRIPT:

James West: Hey! Welcome back to Midas Letter Live. You might recognize my next guest, most everybody does in the cannabis industry these days. Cam Battley is the Chief Corporate Officer of Aurora Ctannabis. Cam welcome back.

Cam Battley: It’s nice to see you James. I love the brand new decor of “old-timey” microphones.

James West: Yes, these are actually stashes and vaporizers because we’re getting ready now that cannabis is legal, you’re going to be able to tune this up, put in your vape cartilage and [inhales deeply].

Cam Battley: I hope you have some Aurora stuff in there.

James West: I hope we do too because now that it’s legal you guys can bring free samples and we can try it live on the air which I don’t know if you’ve met my sidekick Ed Milewski, who’s currently golfing in Scotland right now on one of the world’s oldest golf courses, we are planning to sample product live on the air.

Cam Battley: Live on the air? Really?

James West: Live on the air!

Cam Battley: I will tune in for that I’ll tell you.

James West: Cam, I can’t wait. Let’s cut to the chase though. Aurora has made some incredible moves. I mean I keep saying to you let’s do another interview. You keep saying let’s wait a bit because we have something big that’s going to be announced, let’s talk after that. I wait, boom you announce something. I ask you to come on and you say wait a second we have another big thing going on. So, I think the last time we spoke, you had just announced MedReleaf.

Cam Battley: Yes.

James West: So, there’s been a few things happening since then?

Cam Battley: Yes, we’ve been busy. We’ve done some more acquisitions. We’ve made more progress with our facilities. We’ve set an analyst and investor day for people to come in and take a look at Aurora Sky and the modern marvel of what that is.

James West: So, anybody who is in Toronto, oh in Edmonton right?

Cam Battley: We would have a hard time getting that facility to Toronto.

James West: (Laughter) Yes or them to Aurora, or Aurora Sky in time. Right, okay so I want to start with a conversation about your announcement that you’re going to issue shares and warrants of your subsidiary Australis capital to shareholders of record of Aurora. What’s the significance of that?

Cam Battley: Well a couple of things. One, we’re divesting. That’s the headline. We’re divesting US assets. Now, they weren’t threatening to our listing on the TSX because they don’t touch the plant and they were non-operational but if we want to have you as assets that at some point will become operational; we have to spin it off and divest and that’s exactly what we’re doing. So we will no longer own those assets and instead we’re doing something really interesting. We’re giving them essentially to our shareholders. So, shareholders will receive a share and a $0.25 warrant in this new company Australis Capital that we’re creating.

James West: Wow, where’s mine?

Cam Battley: We’re hoping that’ll make them happy.

James West: Yeah!

Cam Battley: Well if you’re a shareholder.

James West: I think I might be. Does this mean that Aurora is abandoning any sort of pretense towards a US strategy because that is somewhat of the perception.

Cam Battley: No. What we’re doing is abiding very closely by the guidelines of the TSX. They’ve made it very clear they don’t want companies in Canada in the cannabis industry involved in operations that touch the plant in the US. So that’s why we’re making it super clear we’re divesting. We’re not going to own any assets at Aurora.

Now that said, the way we’re structuring this is with a potential back in right. So, if the regulatory oversight, regulatory guidelines in the US change over time we will have an option to come back in. But for the time being its incredibly important this company be separate from Aurora, operates separately, have a separate board and management and that’s what we’ve done.

James West: Very cool. Well I’m curious as to why the Australis if it’s all about the United States?

Cam Battley: What do you know about Aurora? Have you ever heard of the Aurora Borealis?

James West: [Laughter] Okay so this is the Southern Aurora Australis. Right?

Cam Battley: So, you’ve got it. Yeah so, the Aurora Borealis is the Northern Lights.

James West: Boy, there’s nothing quick about me Cam. Don’t worry I will never spring anything on you like that. That’s of course, that didn’t even occur to me. Vroom, right over my head. The other bigger thing that, to me was a bigger thing, was the fact you took over Anandia Labs.

Cam Battley: Isn’t that nice? So, there’s no better science company. No better cannabis-science company in Canada and maybe nowhere in the world than Anandia and they were so highly respected not only for their testing and the accuracy and dependence of their testing which we have guaranteed will remain, but also for their deep cannabis science, the genetic science, and so on. That’s a path we think to intellectual property; an area we’re investing a lot more in these days than we have in the past.

James West: You bet and so in combination with CanniMed, it would look like you are really creating a scientific division that sort of stands completely apart from the business of cannabis apart from the fact that it’s all about cannabis science.

Cam Battley: So, Aurora was already highly advanced in cannabis science doing work with for example, plant tissue culture or micro-propagation and a number of other things. Now, of course we’ve added CanniMed and their science so we’re in the process assuming we close the acquisition with MedReleaf, we’re doing it with them as well. Now we’re laying unstop of all of that the science of Anandia. We couldn’t be happier. We think this positions us as one of the strongest cannabis science company in the world.

James West: Is it safe to conclude or infer rather that the combination of CanniMed…

Cam Battley: You used infer correctly. Very well done (Laughter)

James West: Well thank you. I don’t know how that happened but even a broken clock is right twice a day Cam.

Cam Battley: Sorry I interrupted you, please continue.

James West: So, what I infer from that relationship with the CanniMed and the Anandia and the Aurora combination that there is something developing on the science side that is not yet apparent.

Cam Battley: Do we have a conscious strategy that is evolving and will we have more to say about that this year? Yes, in fact, yes.

James West: That’s as close as I’m going to get to that I gather.

Cam Battley: At the moment.

James West: The other thing that was interesting to me is that you made; you were 7 million of a 10 million dollar ACMPR applicant.

Cam Battley: With some lovely branding.

James West: Lovely branding. Okay so that was the attraction; the branding?

Cam Battley: That was part of the attraction, yes.

James West: Was the other part Chris Bogart, the CEO? Because I happen to know Chris, he’s good friend of mine.

Cam Battley: Yes, in fact we’ve heard nothing but good about him. The talks with him went very smoothly so we’re very keen on Choom.

James West: Cool and so is that kind of like an extension of the idea that you’re going to acquire other brands and or product lines that are going to help Aurora offer a broad range of cannabis products to both recreational and medical side around the world?

Cam Battley: That’s a pretty comprehensive question. So, is that a sign? Yes, we’re going to be involved obviously on the medical side. We’ve made a major commitment to that and you know the larger economic opportunity in the cannabis sector is the international medical opportunity with this cascade of new medical systems being introduced in Europe and elsewhere. Of course we’ve made a very strong commitment to having a solid and robust and respective brand on the consumer side here in Canada. We have been ramping up really hard to be ready for consumer legalization here. By the way, I can’t believe we’re this deep into the interview without acknowledging what happened this week.

James West: What happened?

Cam Battley: Something about cannabis legalization in Canada.

James West: [Laughter] Oh is it finally happening?

Cam Battley: Yeah, yeah, it’s finally happening.

James West: Last night the senate finally approved the third reading but was Royal Assent given by the house? I wasn’t clear on that.

Cam Battley: Royal Assent is actually given by the Governor General. I would think tomorrow.

James West: So technically it’s not quite legal?

Cam Battley: Technically it’s not. In fact, it won’t be quite legal until it’s actually implemented. Now we have to publish the regulations in the Canada Gazette and the federal government wants to give the provincial governments a little bit of time, a little bit of extra time to get ready. I think we’re still anticipating implementation in the second half of September. Which is pretty cool because we’re changing the World.

James West: Yeah, well that’s really cool. I mean so how would you respond to this point to all of the nay Sayers that say no we’re not ready; chicken little the sky is falling.

Cam Battley: Of course, we’re ready. It’s not like we’re inventing cannabis use in this country. Canada has one of the highest rates of cannabis use in the world. So when I heard people say, “oh my god, the sky is going to fall”, well it hasn’t been falling for the last several decades. All we’re doing with consumer legalization is something really smart from a public policy perspective.

We’re moving from a vast and sophisticated black market that’s spread across the country into a legal and regulated market that’s going to be safer for everyone involved; better for our youth, better for public health and safety. Oh, and by the way it opens up huge economic opportunities for companies in this sector. You’re seeing massive investment, economic development, employment growth and innovation and it positions Canada as the world leader in this space so we can, I have to say this in an evil voice, Take over the world.

James West: Muahaha. So, what would you say to the criticism generally lobbied by let’s just say unlicensed participants in the system that the existing recreational supply of call it 45,000 kg per year has been serviced since the sixties successfully by a black market that as you say is sophisticated and robust; is the government actually going to use the C-45 legislation to shut down those guys? Or is there a potential for cohabitation somehow that is not going to undermine the balance sheet or the investment thesis of the recreational revenue argument?

Cam Battley: I gather you’re going to have Prime Minister Trudeau on your show next week? and perhaps he can answer those questions.

James West: I had wanted him to be on this week but I had you coming so

Cam Battley: I’m joking but I’m not. The issue here is one of public policy from the government’s perspective and we’re working within that public policy environment. One thing I do think is important and I’ve spoken about this extensively; we are creating a new market for regulatory companies like Aurora but I would like to see as much as possible the opportunity to bring the people who come from the cannabis culture of the people who are currently involved in the cannabis perhaps those have been involved for quite some time, to see room for them made in the legal business.

James West: Hmm.

Cam Battley: To that end we’ve spoken about the monopoly systems put up by some of the governments in Quebec and Ontario and elsewhere. There should be some room made for people who have been traditionally involved in the cannabis business, people from the culture; that’s a repository of tremendous knowledge and passion for the plant. Wouldn’t it be great to actually lift these people up into the legitimate market rather than shut them out and say you’re not welcomed?

James West: Wow. That’s uplifting

Cam Battley: You look astonished.

James West: Well that’s just such a refreshing approach that I haven’t quite heard.

Cam Battley: Well Aurora’s different. Aurora’s very different. We come from, we have a unique hybrid culture that we’re very very proud of. People have heard me say it before, you have suits like me and we have a number of our executives and managers who come from mature Industries but what makes us special is that were combined with people who come from the cannabis culture. People who work in our operations, in our customer care in our regulatory side and that brings a lot of energy and sense of mission and passion into the company. I think that’s one of the things that distinguishes Aurora; makes us different.

James West: Interesting. Cam, I’m going to leap over to YouTube now because we’ve started talking to our audience in real time. They like it, I like it.

Cam Battley: Because this is live!

James West: This is live! And now people really believe it’s live.

Cam Battley: And if I start dropping F-bombs, they’re going to go out there.

James West: Well, you know we’ve experimented with that and there’s something about time and place. It just doesn’t work for us but an individual; I don’t know who this individual is but they go by the handle on YouTube Freedom Unleashed. A very positive and persistent participant in our audience, so I’m always eager to answer whatever questions, he, she, they, it comes up with. His question, her question potentially ” Will MedReleaf holders get the warrants from the new Australian branch or only Aurora holders?

I’m assuming they’re referring to Australis?

Cam Battley: Australis Capital. We haven’t announced the timing as to when we’ll be making that move. We also haven’t announced the timing yet as to when we anticipate moving onto the CSE. That’s up in the air for the time being.

James West: Okay, another question from a person who goes under the handle XJesterSX

Cam Battley: [Laughter] It must be great to have to read out these internet names.

James West: Ha-ha. It’s like I’ve got to read it but I got to kind of pre-read it before I read because sometimes they contain some booby traps. But this looks pretty tame.

XJestersX wants to say or rather ask, once Aurora’s acquisition of MedReleaf is complete will patients under both platforms get access to the full product offering under both entities? Or will they still have to register separately?

Cam Battley: Yes, the answer is yes. In fact we’re in the process of doing the same thing with CanniMed right now. The intention is to be able to offer I think it’s somewhere between 50 and 60 different products from Aurora, CanniMed and ultimately if we’re successful in closing MedReleaf across the board, making them all easily available to all our patients. That should be a significant advantage to our patients.

James West: Okay and here’s’ one from; not to leave out Facebook Andrew Kittle wants to know how the new Aurora Frost is selling?

Cam Battley: Like hotcakes. So Aurora Frost just to explain is what we call fine trimmed cannabis. It’s also more colloquially known as Keith. It’s the crystals, the trichomes of the cannabinoid. What we’ve done is come up with an innovative and successful method of creating this product without any chemical change to the product itself because that’s prohibited by Health Canada regulations. You’re not allowed to make any chemical change to the dried cannabis for it to be dried cannabis.

James West: Right, we used to call that “Green Crack”. It’s basically pure trichomes.

Cam Battley: It’s essentially that. That’s what it is. I’m astonished at the depth of your knowledge here.

James West: [Laughs]

Cam Battley: And I’d love to hear some time as to how you came up with that.

James West: I’m sure we’ll have many of these conversations but did you bring any of that with you?

Cam Battley: [Laughs] No

James West: [Laughs] I guess not. Jeff Shi, one of our other regular guests or rather audience member on Facebook just commented that Mr. Trudeau announced the rules will kick in October 17th, 2018. Now my audience members are not known for distributing distant information. I’m taking that straight at face value but I’m assuming he’s absolutely right. So October? Just in time for Halloween.

I know what I’m going to dress up as.

Cam Battley: Just as long as you’re not distributing candies to the kids.

James West: That’s right. Cameron, awesome as usual. Let’s leave it there. We’ll come back to you as soon as we can. Wish you the best of luck and thank you for your input today.

Cam Battley: Thanks James.

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