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Jun 26, 2018

Aurora CEO sees no dot-com bubble burst for marijuana sector

Aurora Cannabis CEO: No concerns about a 'dot-com bubble' in the marijuana sector

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Investors of the bourgeoning marijuana sector in Canada will not suffer the same fate as those who bought into the dot-com craze of the late 1990s, said the CEO of Aurora Cannabis.

However, he cautions, investors should brace for a wave of consolidation as the sector matures.

“I think you are going to see some carnage… Everybody’s welcome and the people who execute will survive,” Aurora Cannabis CEO Terry Booth told BNN Bloomberg in an interview on Tuesday. “Will it become five or 10 top growers with your craft, high-quality boutique brand? Perhaps.”

But while many companies will eventually merge Booth is adamant the sector is not overvalued or in a bubble.

“I don’t have any concerns whatsoever about a dot-com bubble,” said Booth. “The cannabis space has existed, the market has existed for over 50 years. We're just stepping into a space and pulling people over to our side of the fence.”

Diverging from other industry players who have warned on the sector’s overvaluation, Booth asserts that Aurora is “undervalued” and poised for growth with the help of the company’s new production plants.

At full production, Aurora’s new Sky facility in Alberta is expected to produce 100,000 kg of marijuana a year, which should generate $800 million, Booth said. He adds that three more facilities are in the works through a partnership with Green Organic Dutchman.



“Do the math on that, that’s $3.2 billion,” Booth said.

He said he’s also not worried about a supply glut — at least not in the near term.

"I think initially you'll see actually a lack of supply in the Canadian market. But this is a global company and it's a global industry. We look five years out before we see any glut in cannabis supply,” Booth said.