Aleafia Archives - Green Market Report

StaffStaffOctober 8, 2019
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7min2110

It’s time for your Daily Hit of cannabis financial news for October 8, 2019.

On The Site

MedMen

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) and PharmaCann, LLC made a big deal back in December of 2018 that MedMen would buy PharmaCann in an all-stock transaction. That deal, once valued at $684 million, is now off. MedMen is now saying that it will focus on leveraging its retail brand, its leadership position in California and its digital platform to grow the business will create greater shareholder value than the completion of the transaction.

The company also took this moment to announce that Zeeshan Hyder has been appointed Chief Financial Officer at MedMen. Mr. Hyder, currently MedMen’s Chief Corporate Development Officer, has been an integral part of the leadership team at MedMen since 2017, overseeing corporate development, investor relations and other financial growth initiatives. To date, Mr. Hyder has led over $300M in M&A deals executed, partnered with the CEO to take the company public and raised $500M in capital for direct investment into the business.

Hyder succeeds Michael Kramer, who apparently was terminated as of October 7, 2019. Kramer was only just hired in December of 2018 and he followed the previous CFO James Parker who only lasted a year and half and is currently suing Medmen for breach of contract.

Aleafia Health

Aleafia Health Inc. (TSX: ALEF)(OTC: ALEAF) has terminated its deal to buy cannabis from Aphria Inc. (TSX: APHA)(NYSE: APHA) saying Aphria failed to meet its supply obligations. The deal that was agreed to on September 11, 2018 said that Aphria would provide up to 175,000 kg equivalents of cannabis products over an initial five-year term, commencing May 1, 2019. Aleafia said the termination should not affect the company. A few weeks ago, Aleafia told the market on Tuesday that it will achieve positive net income for the quarter ending September 30, 2019. The company also stated that it had $51 million in cash on hand.

Aphria released a statement saying, “We are disappointed that Aleafia has chosen to terminate its Agreement with Aphria Inc. The Company had every intention of fulfilling its obligations under the Agreement. As a large shareholder of Aleafia, Aphria made good faith efforts to ensure the continuation of the Agreement understanding it was in the best interest of all parties involved. However, the termination of this legacy Agreement frees up significant supply allowing the Company to service its brands that are in high-demand across the country.”

In Other News

Target Group Inc (OTCQB: CBDY) announced that its wholly-owned subsidiary, Canary RX Inc (“Canary”), has been granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis Act (Bill C-45). Strategically located just outside of Toronto, ON, Canary RX will begin cultivating cannabis in its 44,000 square foot facility, producing 3600 kilograms annually.

The Supreme Cannabis Company, Inc.  (TSX: FIRE) (OTCQX: SPRWF) announced that Blissco Cannabis Corp., Supreme Cannabis’ premium wellness brand and a multi-licensed processor and distributor, has received licensing approval from Health Canada for the sale of cannabis oils from its facility in Langley, British Columbia.

 

 


Debra BorchardtDebra BorchardtOctober 8, 2019
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3min4140

Aleafia Health Inc. (TSX: ALEF)(OTC: ALEAF) has terminated its deal to buy cannabis from Aphria Inc. (TSX: APHA)(NYSE: APHA) saying Aphria failed to meet its supply obligations. The deal that was agreed to on September 11, 2018 said that Aphria would provide up to 175,000 kg equivalents of cannabis products over an initial five-year term, commencing May 1, 2019.

“Following Aphria’s failure to meet its supply obligations under the Supply Agreement, Emblem has exercised its contractual right to terminate the Supply Agreement in accordance with its terms. The termination of the Supply Agreement by Emblem was made without prejudice to its rights accrued to the date of termination (including its rights to be refunded the unused balance of its deposit) and its rights to seek damages as a result of Aphria’s default and termination thereunder.”

Aleafia said the termination should not affect the company. A few weeks ago, Aleafia told the market on Tuesday that it will achieve positive net income for the quarter ending September 30, 2019. The company also stated that it had $51 million in cash on hand.

With regards to production, the company also stated a few weeks ago that harvesting is expected to begin in two weeks at the Port Perry facility, whose expansion phase is expected to be finished this November. The Niagara Greenhouse Phase I remains in a grow-ready state pending receipt of a Health Canada Cultivation Licence. Remaining retrofitting is limited to two final growing rooms in the facility’s Phase II portion, which are expected to be completed in October 2019. All other non-cultivation infrastructures including trimming & drying room, shipping, and disposal areas are entirely complete.

Aphria Comments

Aphria released a statement saying, “We are disappointed that Aleafia has chosen to terminate its Agreement with Aphria Inc. The Company had every intention of fulfilling its obligations under the Agreement. As a large shareholder of Aleafia, Aphria made good faith efforts to ensure continuation of the Agreement understanding it was in the best interest of all parties involved. However, the termination of this legacy Agreement frees up significant supply allowing the Company to service its brands that are in high-demand across the country.”

Aphria stock is falling over 5% to $5.11, while Aleafia is down over 2% to 63 cents.


StaffStaffApril 29, 2019
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3min6390

Aleafia Health Inc. (TSX: ALEF) (OTC: ALEAF) reported that its 2018 total revenue was $3.3 million versus zero in 2017. The pro-forma combined Aleafia Health and Emblem revenues in 2018 were $11.3 million an increase of 327% over a combined Aleafia Health and Emblem 2017 revenues of $2.7 million. Still, the company delivered a net loss from operations in 2018 of $9.7 million.

Aleafia Health gross profit in 2018 was $1.6 million. Emblem experienced a net loss in 2018 of $24.3 million.  Aleafia Health and Emblem had combined cash on hand of $63.2 million at December 31, 2018.

“2018 saw Aleafia Health build the foundation for a breakthrough 2019 and beyond. We believe that our strategically placed assets, strong management team and distribution channels will allow us to scale our global mission of growing, processing and selling high-margin, value-added cannabis health and wellness products,” said Aleafia Health CEO Geoffrey Benic. “It is a testament to the execution capabilities and commitment of our team that Aleafia Health has grown from a pre-revenue business to one of the largest licensed producers in under one year.”

Looking Ahead

In the company statement, Aleafia said that with the anticipated expansion of its three production facilities, together with confirmed supply agreements, it should reach an annual production capacity of 138,000 kg of dried flower and extraction capacity of 50,000 kg. The company also gave the following updates:

  • The automated Niagara Greenhouse is now in a plant-ready state, with complete construction and retrofitting of the facility expected to be completed in May 2019.
  • The company received local zoning approval for a 26-acre low-cost outdoor grow on prime agricultural farmland adjacent to its operational Port Perry facility. The Company expects to bring the Outdoor Grow to a plant-ready state in the next week, with perimeter fencing and other required security measures now nearing completion.
  • Construction of the Phase II expansion in Paris is expected to be completed in June 2019, with all necessary equipment in place to begin production by mid-Q3 2019. Additionally, the Company will offer tolling and white label services to other licensed producers looking to leverage the Company’s extraction and packaging capabilities.
  • The company said it intends to leverage the benefit of preferred wholesale pricing under existing multi-year supply agreements, anticipating our first shipment of dried flower and crude resin from Aphria Inc. in mid-2019 as part of the largest ever supply agreement between licensed producers. Aleafia Health will also leverage the three-year, 9,000 kg supply agreement with Natura Naturals Holdings Inc., a wholly-owned subsidiary of Tilray Inc.

Debra BorchardtDebra BorchardtDecember 19, 2018
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4min8601

Aleafia Health Inc. (TSXV: ALEF) is acquiring Emblem Corp. (TSXV: EMC, OTCQX: EMMBF)  are in an all-stock deal valued at approximately $173.2 Million. The combination will create Canada’s largest medical cannabis clinic network with 40 clinics and education centers.

Aleafia’s stock slid slightly by 1% to $1.05, while Emblem’s stock jumped over 13% to lately trade at 81 cents on the OTC Markets.

As a result of the acquisition, Aleafia’s patients will get access to Emblem’s products including capsules, oils and oral sprays. They will also get access to the Emblem e-commerce platform. Aleafia will also get to use Emblem’s license to process medical cannabis products and sell these directly to the patients.

“The Emblem acquisition rapidly accelerates the execution of Aleafia’s strategy to become a vertically integrated, diversified cannabis company. It is difficult to overstate the significance of securing the highest quality medicine for our patients and Aleafia,” said Aleafia Health CEO Geoffrey Benic. “Emblem’s product leadership in the medical and adult-use sectors and highly coveted supply agreements will perfectly complement Aleafia’s cannabis production and clinic operations.

Aleafia said that it expects to leverage Emblem’s approval to supply to the Provinces of Ontario, Saskatchewan, British Columbia and Alberta; national medical distribution through Shoppers Drug Mart; and national retail distribution through Fire & Flower, Starbuds and the emerging OnePlant network. The statement said that through Emblem’s joint venture with German pharmaceutical wholesaler Acnos Pharma GmbH, Aleafia will gain to access that medical cannabis market serving more than 82 million people, with access to approximately 20,000 pharmacies, along with access to Australia’s burgeoning medical cannabis market upon completion of Aleafia’s previously announced transaction with CannaPacific Pty Ltd.

“Emblem’s patient-focused product portfolio and strength in patient education, conversion and retention through GrowWise will be further bolstered by the patient acquisition capabilities of Aleafia’s Canabo clinics. The combination of the companies will form a fully integrated market leader in the medical cannabis sector, with industry-leading patient counts, and the ability to immediately capitalize on full revenue potential,” said Emblem CEO Nick Dean. “Furthermore, our renowned national brands, robust footprint in emerging value-added products, and strong domestic and international growth opportunities will cement our position of strength in this highly competitive market.”

Terms Of The Deal

According to the statement, the agreement calls for Emblem shareholders to receive 0.8377 of an Aleafia common share  in exchange for each Emblem common share, representing the equivalent of $1.21 per Emblem Share and a premium of 27.0% based on the closing prices of Aleafia and Emblem Shares on the TSX Venture Exchange on December 18, 2018. The shares were lately trading at C$1.40. When the deal is completed, it is expected that existing Aleafia and Emblem shareholders will own approximately 59.0% and 41.0% of Aleafia, respectively, on a fully diluted in-the-money basis.

Aleafia and Emblem said in the stament that they currently have access to a combined CAD $69.9 million in cash, to be used for continued product innovation and brand building, construction and development of their cultivation facilities and outdoor grow operations, to support expansion efforts and to pursue strategic opportunities and investments that maximize shareholder value.



About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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