Eleven months after stepping down as CEO of the Canadian marijuana giant he co-founded, former Aurora Cannabis chief executive Terry Booth said he plans to return to the marijuana industry to head up a U.S.-based cannabis investment firm that is an Aurora spinoff.
Booth’s widely publicized exit from Aurora – and now his new job heading up Australis Capital – is similar to the high-profile departure from the cannabis industry and eventual return of former Canopy Growth CEO and co-founder Bruce Linton.
Australis Capital plans to install Booth as its CEO after a long and bruising battle with the Las Vegas company’s former executives ended in their departure late last year.
Australis also announced on Tuesday a nonbinding deal to acquire 51% of ALPS, formerly Aurora Larssen Projects, a global player in the design and construction of cultivation facilities, according to a news release. Australis also has an option to purchase the remaining 49%.
Aurora divested its stake in Larssen in May 2020 “for a nominal amount,” the company said in a regulatory filing.
A condition of the proposed ALPS acquisition is Booth becoming CEO of Australis when the transaction closes.
Australis was spun off from Aurora in 2018 after TMX Group, the largest exchange operator in Canada, warned that publicly traded cannabis firms with holdings south of the border could be delisted.
Booth is currently a principal of ALPS.
Assuming the ALPS purchase is completed as planned, Booth, who resigned as Aurora’s CEO in February 2020, will join Australis as the new chief executive.
“We’re going to kill it,” Booth said in an interview with Marijuana Business Daily.
“The motto of that is for Australis to build facilities for others. We’re not doing an Aurora 2.0 here.”
Aurora announced Booth’s “retirement” at the same time the company disclosed that nearly 500 full-time positions were eliminated to save costs.
His exit was the latest in a string of high-profile CEOs who’ve departed cannabis firms in Canada, only to reemerge with businesses in the United States.
Ousted Canopy Growth CEO Linton joined Michigan-based Gage Cannabis Co. as executive chair in 2019.
In addition to the ALPS purchase, Australis announced its planned acquisition of Green Therapeutics, a Nevada medical marijuana business.
It is the second time Australis set its sights on the Nevada company.
Alberta-based Aurora does not maintain direct ownership in Australis. But the company holds warrants that would allow it to acquire an ownership interest if Australis’ business operations in the United States become legal under federal laws within 10 years.
Battle for board
Australis is emerging from a nasty dispute between the current and former executive teams, which spent the latter half of 2020 fighting for control of the company.
The dispute started in June, when Australis announced its intention to expand into the fintech industry with the planned acquisition of Passport Technology, a casino fintech company.
Soon after, Australis shareholder Roger Sykes formed Roger Sykes, Concerned Shareholder of Australis Capital, and issued an open letter, saying the “current leadership of the company is broken and not acting in the best interests of all shareholders.”
The group grew to include Booth and Jason Dyck, another Aurora alum.
In August, the dissident group had demanded an immediate change in leadership at the company to protect shareholder value, “as demonstrated by the Company’s poor share price performance since inception.”
A week later, Australis’ then-management fired back, saying the leadership put forward by the dissident group was “chock full of former Aurora insiders.”
“When one looks at the history of Aurora, with its history of mismanagement, slipshod acquisitions, and the largest write-down in the history of cannabis – it is clear that shareholders of this Company cannot afford another regime headed by Mr. Booth and his yes men,” the company’s former management said in a news release.
“Creating a $1 billon company with $4 billion of investors’ money is nothing to be proud of – and nothing the investors in Australis should want to be involved with.”
The battle culminated in an annual and special meeting of shareholders in November.
Ahead of that meeting, the board nominees put forward by Australis withdrew.
That left only the nominees put forward by the Concerned Shareholders group, who won seats on the board – and control of the company.
Booth told MJBizDaily the pending transactions represent a “significant reset” for Australis Capital.
But he said the company is not looking to create another Aurora.
“This is not a big capex (capital expenditure) plan,” he said.
Australis intends to secure low-cost cultivation and offtake agreements.
“Where the capex-light approach comes from is we’re not building or buying grow facilities ourselves. We’re building for others,” Booth said.
He also suggested a name change would be considered.
“I think we have to,” Booth said. “What Australis is, it’s actually the southern hemisphere aurora. We call it the aurora borealis; it’s called the australis borealis south of the equator. It was a pretty cool name when it was an Aurora baby brother, if you will.”
Australis anticipates that ALPS cultivation partners will grow Australis-owned and -branded cultivars and then a certain percentage of this will be purchased by Australis at favorable terms and processed into Australis-branded products for adult-use and medical cannabis distribution.
Booth sees opportunity on the East Coast.
“The big prize here is the large facilities that are going to come out of legalization on the East (Coast) are going to be needed, and we feel that ALPS are in an excellent position to win a lot of those contracts because of their experience in the space,” he said.
“There are so many small facilities in the states.”
Booth is reemerging the year after losing control of the company he helped build from the ground up.
The year started with his resignation from Aurora’s CEO position.
Later in 2020, he resigned from the struggling company’s board.
Aurora had a dismal 2020, posting a loss of 3.3 billion Canadian dollars ($2.6 billion), closing its biggest facilities, unwinding some of its global assets, and laying off more than 1,000 workers.
As first reported by MJBizDaily, the company let go 200-plus employees days before Christmas.
Does Booth accept any of the responsibility for Aurora’s problems while he was CEO?
“One hundred percent,” he said.
“You have to own it. You look back at some of the deals that we did – Hempco – I’ll own that. That was not a good deal.
“You have to own it when you’re there for it.”
Australis trades on the Canadian Securities Exchange under the ticker symbol AUSA.
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].