Focused on building companies through early-stage, opportunistic, and diversified investments in the cannabis space
Spun off from Aurora in late 2018
Aims to establish a foothold in the US before US federal legalization shifts
Australis Capital (CSE:AUSA) (OTCMKTS:AUSAF) aims to build companies through early-stage, opportunistic, and diversified investments in the cannabis value chain in the US and abroad.
Australis was spun off from cannabis behemoth Aurora in September 2018, due to the fact that Aurora is not allowed to invest in US cannabis assets due to Toronto Stock Exchange and NYSE listing rules. The firm's aim is to establish a foothold in the US, before a potential US federal legalization shift.
The Nevada-headquartered firm has nine assets in the cannabis industry, four of which are wholly-owned. This includes brands, such as Body & Mind, Mr. Natural and Green Therapeutics. In addition to this, the company has invested in cannabis tracking and loyalty app developer rthm and Wagner Dimas, which holds a number of patents for industrial-scaled pre-roll machines.
The firm notes that has stringent investment criteria, with a focus on near and mid-term high-quality opportunities with strong return potential. It looks for companies that have intellectual property and strong, recognizable brands with a focus on control positions, as opposed to passive investments.
How it is doing
The firm has had a busy 2019, with a host of deals and more to come as it continues to expand its footprint.
In May, Australis announced it had increased its stake in cannabis dispensary operator Body and Mind Inc (CSE:BAMM) and acquired cannabis company Green Therapeutics LLC, including its facility in Las Vegas, Nevada.
Australis acquired certain brands and cultivation assets of Nevada’s Green Therapeutics, including Tsunami, Provisions, and GT Flowers, as well as the right to assume and expand the construction of a 55,000 sq/ft cultivation and production facility in North Las Vegas, Nevada. In total, the firm has invested more than $30 million in Green Therapeutics.
Australis also has a recently boosted 36% stake in Body and Mind (BaM), which operates a production operation in Nevada, as well as dispensaries in California and Ohio. BaM products include dried flower, edibles, topicals, extracts as well as GPEN Gio cartridges. BaM continues to expand operations in Nevada and Ohio and recently acquired a majority of ShowGrow and rights in its dispensaries in Long Beach and San Diego, California.
In 2019, Australis acquired California recreational cannabis brand Mr. Natural productions, a company with an intriguing background. Developed by Bob "Natural" Luciano, a Vietnam veteran, more than 50 years ago, the high-quality strains aims to offer relief for people suffering from post-traumatic stress (PTS), chronic illness and pain. Mr. Natural products are cultivated organically and available in several products which include edibles, flower, hash, joints, topicals and more.
Last year, Australis acquired a 15% interest in Nevada-based cannabis technology company Wagner Dimas. The intellectual property company holds a number of patents on pre-roll technology, which generates licensing revenue, alongside opportunities for synergy with other owned companies. Most pre-roll product is either rolled by hand or with tobacco-based machinery, which isn't optimal for either quality or efficiency. In short, the patented machinery is tuned to the needs of cannabis, and creates pre-rolls at high volume.
On a financial level, the company has raised close to US$50 million in equity, has no debt, and has a healthy cash position of around US$30 million. Its market capitalization is estimated to be around US$185 million.
What the CEO says
Australis is tapping into a unique need, as most US cannabis companies are unable to raise capital through traditional sources. The firm says it will continue to target specific geographies where the firm can have the highest impact. Australis and Aurora are strategically aligned, and Aurora has the option to purchase around 27% of Australis, in the event it can freely invest in the US cannabis market in the future.
"At the end of the day, it's all about creating shareholder value," says CEO Scott Dowdy. "That's the mandate. It's to build a unique, distinctive portfolio of assets that we believe is synergistic to what Aurora is building in Canada and around the world."
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Contact Katie Lewis at [email protected]