Auxly Cannabis Group Profile - $XLY.to
Another one for the cannabis basket
Disclosure: I own shares in XLY. I am not a professional. Please do your own due diligence.
Price: $0.15 CAD
Shares Outstanding: 1.341 billion
Fully Diluted: 1.605 billion
Market Cap: ~C$240 (fully diluted)
Enterprise Value: ~C$266 (fully diluted)
1 Year Performance: +275%
How I Found XLY
I have been building a basket of cannabis companies over the last couple of quarters. ROMJ has come on my radar as it’s been mentioned by Maxwell House, Stocks & Stones, Common Sense Investing, Mark E. Meritt, CDN Value Investors, Cup of Coffee Capital and others. If it isn’t obvious, this isn’t an original idea.
XLY has been mentioned in a few different newsletters. Here is one from Cup of coffee capital.
Wolf has a more critical post here.
They were profiled by Maxime Fournelle at the SNN MCC conference.
They were recently interviewed by Bobby
Background
1. Early Years (2017–2020)
Auxly began life not as a cultivator or CPG operator, but as a holding company for cannabis ventures. Instead of building a core asset base, Auxly accumulated:
Partnerships, JVs, minority stakes in:
Indoor and greenhouse cultivation facilities
Nursery/genetics ventures
Research labs
Extraction labs
Hemp/CBD concepts
Retail concepts (in some provinces)
Craft and micro-cultivation partnerships
A beverage JV with Imperial Brands (before pivoting)
Imperial Brands Investment (2019)
In 2019, Imperial Brands made a strategic investment, issuing a debenture and providing Auxly with:
Inhalation IP
Device collaboration potential
Credibility with capital providers
2. Transition Era (2020–2022)
Between 2020 and 2022, Auxly recognized that the original model wasn’t scalable or profitable. This led to a multiyear restructuring that focused on narrowing down operations. Key moves during this period:
A) Exiting or winding down early-stage partnerships
B) Focusing on three high-value assets
Leamington — scalable cultivation
Ottawa — flower & pre-roll manufacturing
Charlottetown — 2.0 manufacturing + R&D
C) Establishing brand identity
Back Forty (value/accessible)
Kolab Project (premium vapes + formats)
Foray (edibles + approachable 2.0)
D) Cost structure overhaul
E) “Go-to-market” modernization
3. Current Era (2023–2025)
Starting in 2023, the impact of all the hard restructuring work began to show clearly in the numbers.
The Ottawa facility was closed and sold in 2024 as operations were streamlined.
Auxly today is built around three assets that actually work as a unified system:
1. Leamington (Cultivation Engine)
Large-scale, low-cost, automated greenhouse
Source of high-potency bulk flower
Consistency in yields and terpene retention
150+ proprietary genetics
2. Charlottetown (Vapes, Edibles, R&D)
Device innovation
Flavour and terpene formulation
In-house testing and QC
Home of Auxly’s vape leadership
Asset Base
Auxly Leamington — Large-Scale Greenhouse (1.1M sq. ft.)
Location: Leamington, Ontario
Facility Size: 1.1 million sq. ft.
Licensed Perimeter: 876,270 sq. ft. (cultivation + processing + storage)
Annual Production Capacity
~90,000 kg finished flower in 2024
Target ~100,000 kg in 2025 (+8–10%)
Key Features
Purpose-built specifically for cannabis
Fully automated: lighting, humidity, temperature, fertigation
Perpetual harvest methodology → continuous supply
Can scale higher within the same footprint
40+ acres of adjacent expansion land
Management has stated they do not need major expansion capex unless international bulk markets open substantially.
Charlottetown — Cannabis 2.0 Manufacturing, R&D, Sensory Lab
Location: Charlottetown, Prince Edward Island
Facility Size: 52,000 sq. ft. (fully licensed perimeter)
Key Features
Vape manufacturing (pods, cartridges, AIO disposables)
Edibles (mainly Foray SKUs)
Oils & capsules
Concentrates
Full pharmaceutical-grade formulation lab
R&D for all new SKUs
Facility throughput increased after workflow automation in 2024–2025
What defines Auxly in this current era
1. Category leadership (according to Auxly)
#1 flower brand in the country
#1 non-infused pre-roll
#1 AIO disposable
2. Sustained profitability
9 consecutive quarters of positive adjusted EBITDA
50%+ gross margins
Strong cost control
Low capex requirements
One of the best EBITDA margins in the sector
3. Balance sheet repair
Major debt settlement with Imperial
Interest burden lowered
Stronger working capital
Leverage down to 1.3× EBITDA
4. Clear identity - A vertically integrated cannabis CPG company with:
National brand portfolio
Consistent execution
Strong category share
Balance sheet that is finally functional
Brands / Products
Back Forty
#1 flower brand in Canada
#1 non-infused pre-roll
Broad portfolio: 28g, 14g, 7g, pre-rolls, vapes
Strong potency-to-price positioning
Kolab
Terpene-forward vapes and higher-end formats
Appeals to more experienced consumers
Foray
Edibles, oils, beginner-friendly products
Focus on approachability and consistency
Other
Capsules, oils, disposables
Limited white-label
Constant SKU development via Charlottetown R&D
Market Position (2025/26)
Domestic
Top 3 national brand portfolio
#1 dried flower brand
#1 non-infused pre-roll brand
#1 disposable vape
Distribution in 97% of Canadian retail stores
Strong performance in ON, AB, BC
International
Unlike DB, Auxly is not yet export-heavy. Infrastructure exists, but international sales are not a core driver today.
Balance Sheet
The balance sheet has gone through a meaningful transformation.
Debt
Total debt: ~$54M
Previously burdensome Imperial Brands debenture fully settled
All covenants met at Q3 2025
Cash
Cash: $30.5M
Working capital: ~$49M
Leverage
1.3× Debt/TTM EBITDA
Share Structure & Ownership
Common Shares: 1.348 Billion
Fully Diluted: 1.68 Billion
Imperial Brands (~20%)
Imperial is by far the largest shareholder through 247,631,691 shares and pre-funded warrants. This represents ~15% of the fully-diluted share count, consistent with both your sheets and Auxly’s filings.
Management
Hugo Alves – CEO - 54,179,592 (3.4%)
Mike Lickver – President - 13,706,651 (0.9%)
Travis Wong – CFO -1,335,317(0.1%)
Management ownership ~ 4.3% of FD shares
Independent Board Members
Genevieve Young – Chair - 183,000
Vikram Bawa - 11,250
Conrad Tate - 485,000
Total board (independents only): 679,250 shares or 0.04% of FD shares
Management & Compensation
Hugo Alves — Chief Executive Officer
CEO since Aug 27, 2019; President since 2017
Co-founded Auxly and drove the company’s pivot into Cannabis 2.0 (vapes, edibles, derivatives)
Previously a senior partner at Bennett Jones LLP; nationally recognized in cannabis regulation
Spearheaded the $120M Imperial Brands investment, Imperial amendments, and strategic reset
Chairs the Cannabis Industry Forum, advising the federal government
Holds ~52.1M shares
Compensation structure:
Base salary: $500,000
STI target: 100–200% of salary
LTI target: 200–300% of salary
Mix of cash bonuses + RSUs
Significant severance and change-of-control multipliers
Michael Lickver — President
Compensation (2024 MIC):
Base salary: $375,000
STI: $127,188
LTI RSUs: $904,063
No material share ownership disclosed
Travis Wong — Chief Financial Officer
CFO since Jan 1, 2024; previously Interim CFO and VP/SVP Finance
Compensation:
Base salary: $275,000
STI: $101,750
LTI: $760,750 RSUs + $25,310 options
Oversaw elimination of going-concern language through WC cleanup and balance sheet repair
Andrew MacMillan — SVP, Commercial
Compensation:
Salary: $240,000
STI: $88,800
LTI: $391,200 RSUs
Ron Fichter — General Counsel & Corporate Secretary
Compensation:
Salary: $249,583
STI: $92,346
LTI: $406,821 RSUs
Compensation
Short-Term Incentive (STI) – Annual Bonus + 1-Year RSUs
From the MIC: payouts are based on corporate performance + individual performance. The specific measures are:
Corporate Performance Metrics
Overall annual financial performance
Annual operational performance
Year-over-year improvements
Achievement of corporate objectives
These encompass:
Revenue results
Adjusted EBITDA
Gross margin improvement
Operating efficiency
Cash generation / working-capital discipline
Progress toward strategic priorities
Individual Performance Metrics
Executives are evaluated on how well they execute their personal objectives “in the context of overall annual corporate performance.” These include:
Completing strategic initiatives
Hitting functional KPIs
sales execution (Lickver)
cost/margin improvements (Wong)
product development velocity (MacMillan)
regulatory & compliance performance (Fichter)
Long-Term Incentive (LTI) – 3-Year RSUs
Long-term corporate performance
Shareholder value creation
Contribution to long-term success
Implicit measures included in this framework:
Sustained EBITDA growth
Sustained revenue growth
Improved efficiency / margin expansion
Strengthened balance sheet
Market share gains
Successful commercial execution (pricing, distribution, category wins)
Board
Auxly’s board consists of five directors, four of whom are independent. Compensation is a mix of cash retainers and RSUs, with most members electing to take reduced cash to conserve liquidity. Independent director ownership is minimal, while the CEO holds the only meaningful insider equity position.
Genevieve Young — Chair (Independent)
President & COO of Global Public Affairs, one of Canada’s leading government-relations firms. Brings more than 20 years of experience navigating regulatory frameworks, public policy, and communications, including work with cannabis-sector clients.
Appointed Chair in 2021, replacing founder Chuck Rifici as part of Auxly’s governance modernization.
Share ownership: 183,000 shares.
Troy Grant — Director (Independent)
Long-tenured director with capital markets and corporate finance background. Former head of corporate finance at a Canadian dealer focused on resource and small-cap sectors; currently CEO of Elcora Advanced Materials (TSXV: ERA).
Share ownership: 11,250 shares (effectively minimal).
Conrad Tate — Director, Chair of Compensation Committee (Independent)
Former Corporate Development Director at Imperial Brands, where he led over US$25B in global M&A transactions and helped shape Imperial’s long-term cannabis strategy. Originally joined as Imperial’s board nominee; now serves independently following his departure from Imperial.
Share ownership: 485,000 shares.
Vikram Bawa — Director (Independent)
Senior global marketing executive with extensive CPG experience across Europe, Asia, and North America. Previously VP & Head of Marketing for Logitech (Asia/Europe), currently Chief Marketing Officer at Bosch Home Appliances.
Share ownership: no common shares.
Hugo Alves — Director & CEO (Non-Independent)
Financial Track Record
TTM (Q3 2025)
Revenue: $145.9M
Adjusted EBITDA: $42.3M
EBITDA Margin: 29%
Operating Cash Flow: $18.6M
Q3 2025
Revenue: $39.9M (+20% YoY)
Gross Margin: 56%
Adjusted EBITDA: $12.3M (+48% YoY)
Net Income: $20.5M (inflated by settlement)
Trend
Auxly has delivered nine consecutive quarters of positive adjusted EBITDA. This is not a company that is profitable based on an “adjusted” number, they also generate cash. You can see the income and cash flow statements (after excise tax, inventory adjustments and working capital adjustments removed).
Valuation
Auxly is cheap on a ttm basis at about 6.3x EV/EBITDA. As with ROMJ, DB, and some others, I believe we are well under 10x FCF moving forward for XLY.
Investment Thesis
The thesis boils down to similar things to other LPs, most notably Decibel Cannabis.
1 - Domestic Market Stability
I believe we need to see continued stability in the domestic market for XLY to work out well.
2 - Moderate to Low Capital Requirements
XLY is not looking at major capacity growth like LOVE or ROMJ. They have identified some modest improvements that can be executed.
3 - Share Consolidation
Very similar to DB. I don’t think it’s required, but a share consolidation to bring the outstanding shares out lower and the price higher would be positive for the story.
4 - International Expansion
As of writing, there is no international revenue. This is an opportunity for XLY moving forward.
5 - Continued Deleveraging
Though XLY is not overly levered here, I do think continuing to delever will help the valuation.
Risks
Again, very similar to DB. Here are the major risks that I can see:
1 - Domestic market volatility
Although stabilizing, there is no guarantee this continues. We could see some changes in pricing or behavior that would be negative for XLY.
2 — Category Dependence (Flower, Pre-Rolls, Vapes)
Their revenue is anchored in three categories — dried flower, non-infused pre-rolls, and disposables.
3 — Excise Tax Pressure
Noise both domestic in Canada, USA and international.
This is a catch-all for some short term noise or headwinds. This could be excise tax reform, US legalization slowdown or International markets becoming more closed off for XLY.
4 — Balance Sheet Limits Optionality
Although Auxly has repaired its balance sheet, leverage is still present.
At ~1.3× EBITDA, it’s manageable — but it also means Auxly cannot easily pursue big strategic moves without either:
taking on more debt, or
issuing equity (which is difficult given the share count).
5 — No International Growth Lever
This is the biggest difference vs DB.
Auxly does not have EU-GMP certification and does not have a meaningful export program. If domestic growth stalls, Auxly cannot quickly look outside Canada for relief.
6 — Large Share Count
The fully diluted share count (1.68B) is a persistent overhang.
Even with solid EBITDA, the optical impact of such a large share base depresses valuation multiples and limits per-share upside. As mentioned earlier, they are aware this is a barrier and I expect resolution in the next 12-18 months.
7 - Low Board Ownership
I think XLY has some work to do with how little the board owns in common shares. Though the composition of the board is not a concern, I would like to see the board own some more shares.
Closing Thoughts
Auxly has quietly become one of the most profitable and efficient operators in Canadian cannabis. The combination of category leadership, brand consistency, steady margins, improving cash flow, and a manageable balance sheet makes this an attractive domestic-focused name.
In my cannabis basket, Auxly provides stability, scale, and margin defensiveness. They provide a solid anchor in my cannabis basket.
Thanks for reading my work.
Disclosure – long XLY.to
Thanks Dean - great write-up!
Very thorough! THX Dean
Curious your thoughts on the executive comp. esp. relative to the industry. Seems hefty..