Ladies and gentlemen, my name is Michael Singer, and I am the Executive Chairman of Aurora Cannabis, Inc., and I welcome you all to our annual general and special meeting for the company's financial year-end, June 30, 2020. I will act as Chairman of this meeting. Joining me on the call today is Miguel Martin, the Chief Executive Officer at Aurora; Glen Ibbott, the Chief Financial Officer at Aurora; and Jillian Swainson, the Chief Legal Officer at Aurora. I now call the meeting to order and will commence with the formal part of this meeting to appoint a Recording Secretary and a Scrutineer for the meeting. I appoint Jillian Swainson, our Chief Legal Officer and Corporate Secretary, to act as Recording Secretary for the meeting. I also appoint Vanessa Lee and Evelyn Hsu of Computershare Trust Company of Canada as Scrutineers for this meeting.
This meeting is being held in a virtual-only format, which is being conducted via live audio webcast. With respect to the procedures at today's meeting, as Chairman of this meeting, I will propose motions and, in accordance with the articles of the company, no motion proposed by me need to be seconded. We will conduct the votes on the matters before us by a poll on the Lumi system. On the poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder. The poll will be open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until conclusion of discussion on each resolution prior to casting your vote.
Due to the format, there will not be an opportunity to address the meeting in real time during the formal proceedings. However, registered shareholders or duly appointed proxy holders will be able to enter questions to be addressed during the Q&A session following conclusion of the formal portion of the meeting. As is the case with an in-person meeting, due to time constraints, we will not have time to address all questions through the platform and ask that you follow up with our Investor Relations team if your question is not answered today. There is an online presentation that you will be able to view during the course of the meeting. Viewers are asked to please refer to the disclaimer with regards to forward-looking statements as set out in the information circular for this meeting.
Viewers are cautioned not to place undue reliance on the forward-looking statements contained in this disclaimer. Any statements that are contained in this presentation that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements in this presentation include, but are not limited to, statements with respect to accretive earnings, statements with respect to the funded production capacity, which may not be achieved or realized within the timeframe stated or at all, the anticipated size or revenue associated with the adult consumer market in Canada, and the global market for medical marijuana. These forward-looking statements are based on certain assumptions regarding Aurora, including expected growth, results of operations, performance, industry trends, and growth opportunities. While Aurora considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect.
There can be no assurance that the plans, intentions, or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect, and actual results may differ materially from those anticipated. Aurora's public filings are available on SEDAR. I now declare the polls open on all resolutions. Notice of Meeting. The notice calling this meeting and all proxy-related materials were delivered to shareholders by notice and access, with the materials posted on the company's website. All registered and beneficial shareholders received a notice and access notification. I have a declaration as to the notice and access meeting mailing for this meeting, which is available for inspection by any shareholder.
In view of this, I will dispense with calling for a reading of the notice, and I will ask the Recording Secretary to file the declaration of the Notice and Access meeting mailing with the minutes of this meeting. Scrutineers' Report. Does the Recording Secretary have the Scrutineers' Report on attendance?
Yes, I do. The Scrutineers' Preliminary Written Report on Attendance states as follows: One shareholder in person representing 16 shares, 270 shareholders by proxy representing 48,828,603 shares, 271 total shareholders holding 48,828,619 shares. Our total shares issued and outstanding is 121,028,720 shares. The percentage of outstanding shares represented at the meeting today is 40.34%, and this attendance meets the quorum requirement for the meeting.
The notice of the meeting having been given as required and a quorum being present, I declare this meeting to be duly called and constituted for the transaction of business. Last Annual Meeting. The minutes of the last annual general and special meeting of the company held on November 8th, 2019, are filed in the company's record book. I now put forward a motion that the reading of the minutes of the last annual general and special meeting of the company be dispensed with and that the minutes be taken as read and approved. May I please have a motion that the minutes be taken as read, approved, and adopted as tabled?
This is Miguel Martin, CEO, so moved.
Motion carried. Thank you. Financial Statements. I will now table the financial statements for the company's financial year-end, June 30th, 2020, the report of the auditor, KPMG LLP, and the related management's discussion and analysis thereon. These financial statements have been filed by the company on SEDAR. I would like to propose that we dispense with reading the financial statements. Please note that there will be a question-and-answer session after the formal part of this meeting to discuss the company's financial situation and prospects. May I please have a motion that we dispense with reading the financial statements?
So moved.
Motion carried. Accordingly, I confirm that the financial statements of the company for the financial year-ending June 30th, 2020, the report of the auditor and related management's discussion and analysis thereon have been submitted and shall be included by the Recording Secretary as part of the formal records of this meeting. Fixed Number of Directors. The next item of business is to fix the number of directors for the ensuing year. Management proposes to fix the number of directors to be elected to the board at eight. I move that the number of directors for the ensuing year be fixed at eight. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using Lumi to vote on this matter, you may do so now.
If you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in Lumi? Election of Directors. The next item of business is the election of directors for the ensuing year. Management proposes to nominate eight persons for election to the board. These persons are all described in the proxy materials, and all of the nominees have agreed to stand for election. The company's articles include advance notice provisions, which provide for advance notice to the company in circumstances where nominations of persons for election to the board are made by shareholders of the company. The company has not received notice of any nominations and, as such, any nominations other than nominations disclosed in the proxy materials for this meeting may be disregarded.
Therefore, I nominate the following eight persons as directors for the ensuing year: Miguel Martin, Adam Szweras, Margaret Shan Atkins, Norma Beauchamp, Ronald Funk, Michael Detlefsen, Lance Friedmann, and myself, Michael Singer. The eight persons nominated are management's nominees for election, as was stated in the information circular for this meeting. I move that the nominations be closed. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using Lumi to vote on this matter, you may do so now. As a reminder, if you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in Lumi? Appointment of Auditor. The next item of business is the appointment of the auditor for the ensuing year.
The company proposes that KPMG LLP be reappointed as auditor of the company for the ensuing year. I now ask for a vote on the motion that KPMG LLP Chartered Professional Accountants with offices at 777 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4T5 be reappointed auditor of the company. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using Lumi to vote on this matter, you may do so now. As a reminder, if you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in Lumi? Renewal of 10% Rolling Share Option Plan and Approval of Unallocated Entitlements.
The next item of business to consider is the renewal and ratification of our 10% Rolling Share Option Plan and to authorize the grant of all currently available option entitlements issuable thereunder until November 12th, 2023, as more particularly described in the company's information circular. To pass the resolution must be greater than 50% majority of the votes cast by shareholders voting in person or by proxy at the meeting. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using Lumi to vote on this matter, you may do so now. As a reminder, if you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in Lumi? Approval of Fixed Performance Share Unit Plan.
The next item of business to consider is the adoption of our proposed Fixed Performance Share Unit Plan and the approval of all unallocated rights and other entitlements issuable thereunder as described in the company's information circular. To pass, the resolution must be greater than 50% majority of the votes cast by shareholders voting in person or by proxy at the meeting. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using Lumi to vote on this matter, you may do so now. As a reminder, if you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in Lumi? Fixed Restricted Share Unit Plan Amendment.
The next item of business to consider is the amendment to our Fixed Restricted Share Unit Plan to increase the number of common shares available for issuance and approval of all unallocated rights and other entitlements issuable thereunder, as more fully described in the company's information circular. To pass, the resolution must be greater than 50% majority of the votes cast by shareholders voting in person or by proxy at the meeting. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using Lumi to vote on this matter, you may do so now. As a reminder, if you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in Lumi? Fixed Deferred Share Unit Plan Amendment.
The next item of business to consider is the amendment to our Fixed Deferred Share Unit Plan to increase the number of common shares available for issuance and approve all unallocated rights and other entitlements issuable thereunder as described in the company's information circular. To pass, the resolution must be greater than a 50% majority of the votes cast by shareholders voting in person or by proxy at the meeting. I now call for a vote on the motion before the meeting. Once again, if you are a shareholder or a voting delegate who is using Lumi to vote on this matter, you may do so now. As a reminder, if you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in Lumi? Advisory Vote on Executive Compensation or Say on Pay.
The next item of business to consider is the non-binding advisory vote on executive compensation, also known as Say on Pay, as described in the company's information circular. To pass, the resolution must be greater than a 50% majority of the votes cast by shareholders voting in person or by proxy here at the meeting. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using Lumi to vote on this matter, you may do so now. As a reminder, if you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in Lumi? Voting Results.
I will pause briefly and ask that all shareholders and voting delegates finish voting on all items presented as we will be closing voting shortly. Thank you. I confirm that voting has been closed. I will pause briefly again to allow our scrutineer to advise if sufficient votes have been cast in favor of the items that were presented today. I have received confirmation from the scrutineer that the company has received sufficient votes in favor of each item to carry each motion. Accordingly, I hereby confirm that all motions were carried. Full voting results will be available on SEDAR after this meeting. We have now concluded the formal business for the meeting, and management will moderate questions following termination of the meeting. As all the business for the meeting has now been concluded, I declare this meeting terminated. Thank you for attending.
We will now move to the informal part of the meeting, and I'd like to turn it over to our Chief Executive Officer, Miguel Martin, to say a few words. Miguel?
Thank you, Michael. Before I share some thoughts on our business and take your questions, it may be helpful to provide a brief background on myself and why I chose to accept the Chief Executive Officer role. My entire career has been steeped in sales, marketing, and leadership roles within the regulated consumer packaged goods industry. I spent 18 years with Altria, ultimately leading their sales group before becoming the president of one of the largest and most successful electronic cigarette companies, Logic, which was sold to Japan Tobacco. After that, I joined a startup company and became CEO of Reliva CBD, which was recently acquired by Aurora. My broad range of experience and successes is directly relatable to the job at hand at Aurora. I accepted the CEO job role because I see an opportunity to quickly leverage my skill set in regulated CBD brand development here at Aurora.
I am fortunate to step into a company built with a dedication to science and a compliance-first approach. With strong execution, I have a confidence that we can build a profitable business in Canada that can be portable to other large global cannabinoid markets as well. Our business has four main pillars. First, the Canadian medical cannabis market. Second, the European and select international medical cannabis market. Third, the Canadian consumer market. And fourth, the U.S. hemp-derived CBD market. In fiscal 2020 and into fiscal 2021, our Canadian and European International Medical businesses have been performing well as we maintain strong market share positions in both segments. Our plan for fiscal 2021 is to maintain and grow our market share as we drive towards profitability. In our U.S. hemp-derived CBD business, Reliva, we maintain number one or number two position in brick-and-mortar stores as reported by syndicated data providers.
The Canadian consumer market represents Aurora's greatest opportunity, and we are executing a plan to reverse market share trends and drive increased profitability. This plan entails three key segments. First, focus on our premium brands: Whistler, San Rafael '71, and Aurora. This does not mean abandoning Daily Special, but it does mean that we need to leverage our brands where we earn higher gross margin dollars per gram more aggressively. It also means extending these brands into new formats such as vapes and concentrates. Second, growing share in key high-growth formats, specifically vapes, pre-rolls, edibles, and concentrates. In fact, we're number one in gummies today, and we're allocating additional resources to that format to continue to grow it and retain our number one position. Also, our first phase of vape launch was very well received and we're encouraged by the consumer feedback.
Third, looking for opportunities to extract additional efficiencies from our business. This can include better aligning our production and manufacturing costs to demand and exploring ways to shift fixed costs to variable costs. In my many years of experience, when you're in a dynamic category like cannabinoids, a variable cost model is almost always going to be advantaged as it allows you to be more nimble and responsive to constantly changing consumer demands. Aurora did achieve one of its strategic goals in fiscal 2020, and that was completing an acquisition of the U.S. cannabinoids business. Reliva is the number one or number two ranked CBD brand in brick-and-mortar stores as determined by Nielsen and IRI, which are retail takeaway point-of-sale data providers.
We are suppliers to some of the largest national retail and wholesale chains in the U.S., and our products can be found in over 23,000 retail stores in the U.S. Reliva fits really nicely with Aurora's business since both are approaching the business from a perspective of respecting the regulatory environment, compliance, and testing and high-quality products. The CBD category is growing and currently stands at about $2 billion in total market size, but both retailers and wholesalers see the benefit of CBD products on the shelves, and market analysts are expecting strong growth for CBD as a category in the future. Reliva runs on an asset-light model with high variable costs and few fixed costs. It's a model I've operated in for most of my career and offers many learnings for Aurora as well.
One part of Aurora's business that is unique for most of the Canadian LPs is our commitment to agro-science, plant breeding, and genetics. We have an extremely strong team of scientists developing cannabis genetics for novel cultivars and studying cultivar techniques, as well as technology and, most importantly, driving that science to commercialization and benefits to our business. This is the part of business that I think you're going to hear a lot more of in the coming years as the industry grows globally. The opportunities to leverage the intellectual property that currently exists and is being developed within this business unit is really exciting and something that I expect will benefit Aurora shareholders into the future. So, with that brief overview of the business, we will move to our Q&A session.
In addition to responding to questions that have been submitted through the platform, we would also like to address the most common questions we're receiving through our investor relations mailbox.
Thank you, Miguel. The first question received is, what are you doing to increase the stock price of Aurora?
We can't control the stock market. What I can tell you is that we have four major parts of our business, three of which are really going well. I spoke about this earlier. The Canadian Medical, where we have a market-leading position, we've made some operational changes to increase choices for our patients, particularly the veteran patients. Secondly, in the international medical space, which has really been a consistent performer, and just this week, we announced 40% quarter-over-quarter growth performance. Third, as previously mentioned in the U.S. CBD market, we're either number one or number two in those syndicated data services such as Nielsen and IRI. We have a tremendous opportunity when we have a plan in place, and we're executing against that plan right now. On that plan, let me talk about a couple of key aspects.
When you look at the Canadian rec business, the category is growing. We saw retail sales of cannabis up 11% in July and another 5% in August. Aurora is really focused on driving our premium and super premium brands: Aurora, San Rafael '71, and that super premium brand Whistler. So, we're focusing everything we can in market on those premium brands, which bring higher margins and higher gross margin dollars. We're also focused on winning in key growth categories: vapes, pre-rolls, edibles, and concentrates. And lastly, we're constantly looking for opportunities for efficiencies in our business. How can we better align production and manufacturing costs? And looking for ways to shift our costs from fixed to variable.
The next question is, are you expecting to do another reverse stock split this year?
We don't anticipate a further reverse stock split. But when you think about that aspect, I'd like to highlight a couple of pieces of our business from a financial perspective. First, Aurora has cut $ 60 million per quarter from our SG&A run rate in the last three quarters. So, we were at $ 100 million SG&A per quarter, and we announced that we're in the low 40s in our recent announcement. It's a huge reduction in our cost structure and the largest by any of the Canadian LPs. Second, we appreciate that cannabis companies are being evaluated with respect to their business performance and their liquidity. We wanted to ensure that we're addressing both sides of this equation without any perceived concerns with respect to liquidity. We are now similarly well-capitalized as our key competitors.
Third, we're executing today on the plan that I've outlined to capture value in that Canadian consumer segment. We're focused on generating positive cash flow from our existing businesses, and we expect that our execution will eventually be rewarded by the stock market.
Thank you. The next question is, what new product segments is Aurora considering?
When we look at the plan for the Canadian consumer market, we're really executing around a couple of key areas. The focus is how do we drive sales in vapes, pre-rolls, edibles, and concentrates. As I mentioned previously, our phase I vape launch just happened, and we're quite pleased with the early market share results across the provinces in which we launched it. Secondly, we're now in market with concentrates, and the early indication from retail takeaway data and key customer feedback is that's going extremely well. We believe we have the number one share in gummies, a key category. We see that both in the U.S. and Canada, and we're working hard to grow our share in that core category. And lastly, we're working on driving additional product innovations in these categories and also emerging categories.
Additionally, we'll be offering seasonal offerings to better capture consumer attention as this dynamic consumer is looking for new items in these fast-moving categories.
Thank you. The next question is, are you considering a merger or any acquisitions at this time?
M&A is not something that is on the front burner today. We're laser-focused on executing the plan we've outlined here today, and we expect that that will bring us to generating positive cash flow. Once we're generating positive cash flow from the existing business, that will give us the ability to look for ways to allocate that capital to drive long-term shareholder value. That said, we can't be closed to ideas and opportunities, and we think we have a lot of opportunity for value creation today, but we'll always do what's right for shareholders.
Thank you. The next question is, why should we continue to remain invested in Aurora?
It's my belief that there is a tremendous opportunity in front of Aurora today. We have three parts of our business that are operating really well. We're the leading Canadian Medical business. We have a strong and growing international medical business, and we're either the number one or number two CBD brand, depending on which syndicated service you look at. We've spent a lot of time analyzing and identifying the issues that are facing our Canadian consumer business, and I believe we have a very thoughtful, articulated plan using classic CBG metrics that I believe have worked over the majority of my career. We're starting to see the green shoots from the execution of that plan today, especially in vapes and pre-rolls, and this is where we're going to see the highest impact to our current business.
Lastly, that rec business is growing, and so as we execute our plan, we believe our rewards will be outsized.
Thank you. There are no further questions at this time.
So, with that, I want to thank everybody and call the meeting to close. We have now concluded our question-and-answer session, and thanks to everyone for attending and participating in the meeting. If you have any additional questions or would like to follow up on any questions presented to the meeting, which were not addressed, please email our investor relations team at Aurora, aurora@icrinc.com . Thank you very much.