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Aurora invests $10-million in High Tide ahead of IPO

Aurora Cannabis Inc. said Thursday it has invested $10-million in Calgary-based retail pot and accessories company High Tide Inc., which is just days away from going public on the Canadian Securities Exchange and has plans to expand significantly into the large Ontario market in 2019.


High Tide is scheduled for its initial public offering (IPO) on Dec. 17.


Edmonton-based Aurora said it agreed to invest $10-million by way of brokered private placement in High Tide, giving Aurora 10,000 senior unsecured convertible debentures.


The move comes after Ontario released its cannabis retail regulations, stating that these companies cannot be more than 9.9 per cent owned by a producer if it wants to operate more than one store. Alcanna Inc., for example, is 25 per cent owned by Aurora and would have to overhaul its ownership structure in order to open shops in Ontario.


Aurora’s investment is below 9.9 per cent ownership in High Tide, said Nick Kuzyk, chief strategy officer.


“We’ve structured these convertible debentures to make sure we do not exceed that 9.9 per cent limit. Post-conversion, they will have a small equity ownership in High Tide,” Mr. Kuzyk said.


Terry Booth, chief executive of Aurora, said: “Through our investment, we gain exposure to two unique retail store concepts currently launching across Canada, as well as established cannabis culture brands and thousands of proprietary accessories.”


Also just ahead of its IPO, High Tide said it agreed to buy Amsterdam-based Grasscity for $6.7-million. While this expands High Tide’s reach to Europe, the purchase is more notable for the online presence it will provide, said Mr. Kuzyk.


Grasscity is an online store for smoking accessories and cannabis products, with more than 90 per cent of its revenues coming from customers in the United States, he said.


“It is a natural fit with High Tide since our revenues come from the same product categories – bubblers, grinders, hand pipes, rolling papers, vaporizers and water pipes,” said Raj Grover, chief executive of High Tide.