When Miguel Martin, the CEO of Aurora Cannabis Inc., first set foot in Bevo Agtech Inc.’s Langley, B.C., greenhouse, he saw the potential bursting from every corner. Hundreds of trays of tomato seedlings stretched away under the glow of LED lights, and baskets of blossoming flowers hung from the rafters. Beyond this unexpected synergy, Martin envisioned Bevo’s future, particularly in the realm of orchids.
Aurora Cannabis Inc., an Edmonton-based cannabis industry heavyweight, may have appeared an unlikely buyer for Bevo, an agriculture stalwart still managed by the Dutch family that established it in 1986. However, the match was perfect: Aurora possessed the hulking, temperature-controlled greenhouses that Bevo required for expansion, and in return, Bevo’s stability offered Aurora some respite from the volatile cannabis industry.
In a September interview, one year after Aurora’s acquisition of a 50.1 percent stake in Bevo for $45 million, Martin emphasized, “It’s a company that makes money. It’s a company that’s growing. It’s a company that’s not broken. It doesn’t need us to do everything for them.”
In the cannabis industry, characterized by facility closures, layoffs, and significant financial losses, being a “growing” and “not broken” company are vital for survival. Since cannabis legalization in Canada five years ago, the sector has grappled with challenges, including the persistence of the illicit market, restrictive packaging and tax regulations, and the slow pace of regulatory changes in the U.S.
Amid this challenging landscape, many cannabis companies are shifting their focus to other areas of their businesses to shield themselves from further disruptions. For instance, Village Farms International Inc., based in Vancouver and the owner of cannabis subsidiaries Pure Sunfarms, Leli Holland, and ROSE LifeScience, also operates a subsidiary that cultivates tomatoes, cucumbers, and peppers. SNDL Inc., headquartered in Calgary and known for pot shop brands like Value Buds, Spiritleaf, and Superette, has diversified its holdings by owning hundreds of liquor stores across Western Canada.
As Martin succinctly puts it, “A lot of cannabis companies have evolved and are different than maybe what they were before.” This adaptability and diversification represent a strategic shift in the cannabis industry, as companies explore new avenues to ensure their long-term stability in an ever-changing market.