Aphria Archives - Green Market Report

William SumnerWilliam SumnerMay 8, 2019
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7min1420

It’s time for your Daily Hit of cannabis financial news for May 7, 2019.

On the Site

Investors Are Bullish On Cannabis, According to KCSA Survey

Investors are feeling bullish about the cannabis industry, according to a new survey released by KCSA Strategic Communications. Titled the Cannabis Investor Survey, KCSA polled over 250 retail cannabis investors about their investments and outlook on the legal cannabis industry in the United States.

Illinois Releases Plan For Full Legalization

This past Saturday, Illinois Governor J.B. Pritzker released the plan for full cannabis legalization which is set to begin on January 1, 2020. Companies that currently had medical cannabis licenses would get a jump on other companies with regards to applying for licenses. According to the plan, new licenses for dispensaries would begin on May 1 and processors, craft growers and transporters would begin licensing on July 1. It wouldn’t be until late 2021, that the next round of businesses would receive licenses.

Long-awaited German Tenders Handed to Specialist Trio

White smoke emanating from Germany’s medical agency signals the wait is over to find out which firms have been awarded medicinal cannabis tenders for Europe’s top market. Two Canadian firms, Aphria, and Aurora Cannabis and Germany’s Demecan have won out, it has emerged. The three companies will split a four-year tender to grow 10,400kg between them. Aphria won five of the 13 lots, with Aurora Cannabis and Demecan handed five and three lots respectively.

In Other News

MJardin

MJardin Group, Inc. (CSE: MJAR) (OTCQX: MJARF) today released their fourth quarter and full year financial results for 2018. Revenue for the year was $27.5 million. Adjusted net loss from operations was $27.4 million and adjusted EBITDA was $12.2 million. “2018 was a year of significant change in the company as we expanded in to another US state, entered the Canadian market via acquisition, and became a publicly traded company on both the CSE and OTC,” remarked Adrian Montgomery, MJardin Chairman of the Board and Interim CEO. “In addition, we have restructured our corporate size and organization to better integrate and align with our core business goals in both countries.”

Heritage Cannabis

Heritage Cannabis Holdings Corp. (CSE: CANN) announced that it has closed a $17.3 million bought deal offering, selling approximately 32.6 million units of the company at a price of $0.53 per unit. Each unit consisted of one common share and one-half of one common shar purchase warrant. Proceeds from the offering will be used to increase extraction capacity and follow-on investments in existing portfolio companies, new domestic and international opportunities, working capital and general corporate purposes.

TerrAscend

TerrAscend Corp. (CSE: TER) announced that it has completed the book-build for its previously announced upsized private placement. The gross proceeds from the offering totaled $52 million. The company is issuing common shares in the private placement at the previously announced price of C$7.64, which is a 5% discount from Monday’s closing price.

Cronos Group

Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) announced that is has opened a cannabinoid device R&D facility in Israel. Dubbed Cronos Device Labs, the facility will feature a 23-member team and is comprised of product designers, mechanical, electrical and software engineers, and analytical and formulation scientists. “The launch of Cronos Device Labs is an exciting next step on our journey to become a leader in cannabinoid innovation,” said Cronos Group Chairman, President and Chief Executive Officer Mike Gorenstein. “Vapor is already one of the most popular forms of cannabis consumption, and we see a clear opportunity for Cronos Group to introduce the next-generation of vaporizer products designed specifically for cannabinoid formulations.”

Canopy Growth

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) announced the launch of Spectrum Therapeutics, a new global brand that will encompass all of the company’s ongoing commercial medical and clinical research operations including Spectrum Cannabis, Canopy Health Innovations , and Bionorica SE-founded C3 Cannabinoid Compound Company. Spectrum will be involved with the production and distribution of full-spectrum and single cannabinoid medical cannabis products; education, resources and support for patients and healthcare practitioners; as well as pre-clinical and clinical research and the development of cannabinoid-based medicines.


AvatarMark TaylorMay 6, 2019
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3min8341

White smoke emanating from Germany’s medical agency signals the wait is over to find out which firms have been awarded medicinal cannabis tenders for Europe’s top market.

Two Canadian firms, Aphria, and Aurora Cannabis and Germany’s Demecan have won out, it has emerged.

The three companies will split a four-year tender to grow 10,400kg between them. Aphria won five of the 13 lots, with Aurora Cannabis and Demecan handed five and three lots respectively.

The tendering process has been dogged with delays and several court cases as frustrated German firms sued the Federal Institute for Drugs and Medical Devices (BfArM), the regulatory authority responsible for oversight, over its handling of the licensing.

Germany’s 83m population and standing as the top European market makes it a key jurisdiction for firms looking to become the number one global cannabis company.

BfArM has not yet made an announcement, which some industry watchers claim is linked to the 10-day window for losing firms and other parties to legally contest the decision.

The three companies were selected from a field of 79 entrants, at the second attempt by the German government. They were graded on domestic cultivation, based on a points system focused on infrastructure, quality standard, security plans, and price.

It is no surprise to see two Canadian firms selected, as the country’s experienced and wealthy marijuana growers has spent several years partnering with German firms or buying them outright in anticipation of the massive marker opening.

Demecan is a joint venture partner of Canadian firm Wayland Group. Trading of Wayland’s stock was halted on the Canadian Securities Exchange pending the news.

The result “is a very important footstep toward our twofold strategy of establishing high-quality, in-country cultivation in Germany and importing additional flowers and oil from Canada and Denmark to provide the German market with complete cannabis medicine offering,” said Hendrik Knopp, managing director of Aphria Deutschland.

Aurora is yet to comment.

The three firms will split an annual grow of 2,400kg to meet the total over four years, which German experts say is nowhere near large enough to meet the demand from patients.

Germany legalized medical marijuana in 2017, but a reluctance from insurers to cover the cost of the drugs and an unenthusiastic government combined to temper demand.

A handful of Canadian and Netherlands companies ship product to pharmacies in Germany, which has relied on imports of the drug due to the lack of domestic growers.


William SumnerWilliam SumnerApril 24, 2019
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5min1950

It’s time for your Daily Hit of cannabis financial news for April 24, 2019.

On The Site

Cresco Labs

Chicago-based Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) released its unaudited financial results for the fourth quarter and full year ending December 31, 2018. The fourth quarter revenue was $17.0 million, an increase of 411% over last year for the same time period and up 33% sequentially. The company trimmed its net losses to $2.6 million versus the net loss of $3.0 million for 2017 fourth quarter. The quarter’s pro forma revenue was $22.5 million.

Federal Legalization – Then What?

It is fascinating to step back and observe how the mindset of many in the cannabis industry seems to work. Let’s think through a couple of scenarios and have a peek at the landscape in a post-legalization world. Let’s begin with the following

After the Drama, Where Is Aphria Headed Now?

Even in a space with as much excitement as marijuana stocks, Aphria (NYSE:APHA) stood out for having as much drama as a cable TV show. After all the excitement, what’s next for APHA stock? And have the company’s recent moves made it investable again, or is Aphria only appropriate for the most steel-nerved traders?

In Other News

Grown Rogue

Grown Rogue International Inc. (CSE:GRIN) (OTC: NVSIF), a vertically integrated multi-state cannabis operator, announced that it has entered into a binding letter of agreement to acquire Decibel Farms, Inc., an organic cannabis producer and processor. Under the terms of the transaction, the acquisition will be structured as a tax-free merger and shareholders of Decibel will receive $2 million. Decibel owners Shawn Bishop and Buddy Wilson will join Grown Rouge as Vice President of Manufacturing and President of Sales, respectively.

Aphria

Aphria Inc. (TSX:APHA)(NYSE:APHA) announced that it has closed a $300 million private placement offering to institutional investors. The initial investors exercised their option to purchase an additional $50 million in notes, making the deal worth $350 million. The notes are senior unsecured obligations of Aphria with an interest rate 5.25% per year, payable semiannually on June 1 and December 1 of each year, beginning on December 1, 2019. The notes will mature on June 1, 2024.

TerrAscend

TerrAscend Corp. (CSE:TER)(OTCQX: TRSSF) today released its financial results for the fourth quarter ending on December 31, 2019. Revenue for the quarter was $5 million, up from $1.8 million in the previous quarter. Net loss was $11.7 million or $0.13 per share. The company has $21.7 million in cash and cash equivalents. “We are pleased with our performance in the fourth quarter and have laid the groundwork for success in 2019,” said Michael Nashat, CEO of TerrAscend, in a statement. “We are experiencing strong sales momentum in Canada and are making substantial progress towards becoming a leading US multi-state operator.”


Investor PlaceInvestor PlaceApril 24, 2019
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9min2980

Aphria is moving ahead, but questions remain.

By Ian Bezek, InvestorPlace Contributor Apr 22, 2019, 10:38 am EDT

Even in a space with as much excitement as marijuana stocks, Aphria (NYSE:APHA) stood out for having as much drama as a cable TV show. If you’re a trader, APHA stock has been a dream lately. The stock rocketed from $8 to $16 in a month last summer. It then lost as much as 75% of its value, plummeting to $4, after a series of short seller reports. Since then, the stock has bounced 150% off the lows to return to the $10 level, before earnings sent it falling once more.

After all the excitement, what’s next for APHA stock? And have the company’s recent moves made it investable again, or is Aphria only appropriate for the most steel-nerved traders?

Fallout From the Bearish Short Seller’s Reports

A few months ago, short sellers hit APHA stock with heavy fire. Bearish analysts published reports suggested that Aphria’s management had engaged in unscrupulous behavior.

The short sellers suggested that Aphria was engaged in all sorts of questionable if not worse activity. The short sellers said that the company had bought phantom assets in Latin America, engaged in various double-dealing and related party transactions, and numerous other red flags.

Aphria’s board of directors engaged an independent special committee to investigate the accusations. The special committee found some troubling factors, but its results also exonerated the company in various ways. Arguably the most important finding was that the committee confirmed that Aphria’s Latin American assets in fact exist and are progressing toward commercial activity.

The committee suggested that Aphria paid near the top end of a reasonable price range for the assets, but that there is a real business there, unlike the short seller’s reports which had claimed these transactions were largely imaginary.

New Management for APHA Stock

However, Aphria wasn’t blameless either. The board disclosed that: “it appears that certain of the non-independent directors of the Company had conflicting interests in the Acquisition that were not fully disclosed to the Board.”

Probably in conjunction with that, Aphria has seen major management changes. Former Aphria CEO Vic Neufeld has stepped down, as well as Co-founder Cole Cacciavillani. Neufeld, in particular, was implicated in several of the alleged misdeeds that the short sellers identified.

In his place, Aphria has appointed an interim CEO. Irwin Simon is now in charge, at least for the time being. Simon led Hain Celestial (NASDAQ:HAIN) for more than two decades, helping that company take a dominant position in the natural and organic foods space. While it is obviously a weak spot for Aphria not to have a permanent CEO in place yet, Simon seems to have capable hands to manage the company while it recovers from the reputational blows it suffered recently.

Aphria Has a Rough Earnings Report

As William White pointed out, Aphria plummeted on April 15 after an earnings report “with losses per share of 20 Canadian cents. This is a drop from the company’s earnings per share of 8 Canadian cents from the same time last year. It was also bad news for APHA stock by missing analysts’ losses per share estimate of 4.5 Canadian cents for the quarter.”

Revenue was up, but overall sales numbers fell. The market was unimpressed, and the stock is now down around 24% since the report.

Back in December, new upstart cannabis firm Green Growth Brands(OTCMKTS: GGBXF) bid to acquire Aphria. This was a highly unusual deal for several reasons. Among them, Green Growth brands itself had just gone public as the merger of several other firms. Additionally, Aphria had a significantly larger market cap than Green Growth, making it a rather odd target for a takeover offer.

After the earnings tumble, Green Growth stepped away from their takeover attempt. It may be good for Aphria that another element of uncertainty is gone, but it’s hardly unequivocal good news overall.

APHA Stock Verdict

It’s good that Aphria has cleaned house. That was a necessary and important first step in recovering the market’s trust in Aphria going forward. But there’s still a lot to be uncertain of.

Particularly in a market where so many of the big leaders in the space have deals with credible partners, it’s easy to take a pass on APHA stock. Cronos (NASDAQ: CRON) has Altria (NYSE: MO) while Canopy Growth (NYSE: CGC) has partnered with Constellation (NYSE: STZ). Meanwhile, Aurora (NYSE: ACB) doesn’t have a major partner yet, but its management team hasn’t given us any big reasons to doubt its credibility either.

The marijuana stock sector is the Wild West right now. Many of the companies out there are going to crash and burn in the coming years. Aphria’s efforts to clean up their act are appreciated. But in such a risky sector, at least for the time being, it’s advisable to stick to more trustworthy leaders in the cannabis space.

At the time of this writing, Ian Bezek owned MO stock. You can reach him on Twitter at @irbezek.

 


Debra BorchardtDebra BorchardtApril 15, 2019
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6min4690

Aphria Inc. (TSX: APHA) (NYSE: APHA) reported its results, for the third quarter ending February 28, 2019. The company delivered net revenue of $73.6 million up 240% from the prior quarter and 617% from the prior year. Still, the company reported a net loss of $108 million versus last year’s net income of $12 million for the same time period.

Irwin D. Simon , Aphria’s Chairman, and Interim Chief Executive Officer said, “Our organization has experienced significant change in a very short period of time which was necessary to propel the Company forward.  Our Board of Directors and executive team will remain focused on the advancement of Aphria’s leadership position in the global cannabis industry and we are pleased to have announced today the appointment of two new independent directors.”

The Board appointed two new independent directors, effective today. Walter Robb and David Hopkinson will fill two of the three current director vacancies. Walter Robb was a former co-CEO of Whole Foods Market. David Hopkinson serves as Real Madrid Club de Futbol’s (“Real Madrid”) Global Head of Partnerships. He joined Real Madrid in August 2018 and brings his 25 years of professional sports sales, marketing and leadership experience to Aphria.

Green Growth Brands

The company issued a separate press release and said it continues to recommend that Aphria shareholders reject the Green Growth Brands (GGB) Offer and to not tender Aphria shares to the GGB Offer.

Simon said, “We plan to use the $89.0 million in proceeds from the transaction to fund our strategic global expansion initiatives. On behalf of our Board of Directors and management team, we continue to recommend that Aphria shareholders reject the GGB offer and do not tender their Aphria shares to the GGB offer.”

GGB has entered into a share purchase agreement with GA Opportunities Corp. (GAOC) pursuant to which GGB has agreed to purchase for cancellation 27.3 million shares held by GAOC, for an aggregate purchase price of $89.0 millionThe terms of the Share Purchase Agreement include, among other things, that GGB will pay in cash $50.0 million of the Purchase Price to GAOC within 30 days of the date hereof and will issue a promissory note to GAOC for $39.0 million due in six months from the Closing Date.

Aphria has entered into a shortened deposit period agreement with GGB to facilitate the acceleration of the expiry of GGB’s offer to purchase all of the issued and outstanding shares of Aphria. Aphria has agreed to reduce the initial deposit period of the bid to 92 days from January 23, 2019. GGB will be mailing a Notice of Variation providing that the GGB Offer will expire at 5:00 p.m. on April 25, 2019. Based on the closing price of $3.86 per GGB share on the Canadian Securities Exchange on April 12, 2019 , the implied consideration under the GGB Offer would be $6.07 per Aphria share, representing a significant 54.7% discount to Aphria’s closing price on the Toronto Stock Exchange of $13.41 per share on the same day.

Latin America Assets

The company had formed a Special Committee as per the Ontario Securities Commission request as part of a continuous disclosure review that the company performs an impairment test on its LATAM assets subsequent to the filing of the 2019 second quarter financial statements. The committee concluded the review and found that the acquisition of LATAM assets was within an acceptable range, albeit near the top of the range of observable valuation metrics; the company’s investment in LATAM assets is approximately $225 million , after recording the aforementioned non-cash impairment charge, which is approximately $30 million more than the original agreed purchase price of approximately $195 million.

Mr. Simon continued, “We continue to take decisive actions to increase efficiency, including investing additional capital in automation and packaging and adapting production to a new growing method. While this contributed to an increase in our costs, we expect higher future yields per square foot leading to stronger results as we start fiscal year 2020.”


Debra BorchardtDebra BorchardtJanuary 11, 2019
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Aphria Inc. (NYSE: APHA) reported net revenue rose 63% to C$21.7 million for the fiscal 2019 second quarter ending November 30, 2018 versus  C$8.5 million for the same time period a year earlier. The company said that the higher revenue in the quarter was driven by a 92% increase in kilogram equivalents of cannabis sold and an additional C$1.6 million of non-cannabis international sales.

The company delivered a net income of $54.8 million or $0.22 per share versus $6.5 million or $0.05 per share for the same period last year. Aphria said that the increase in net income  was due to gains on its long-term investment portfolio, primarily divestitures of positions in Hiku Brands and Liberty Health Sciences.

The quarter though wasn’t without problems. The company reported that medical cannabis sales declined marginally from 1,466.2 kilogram equivalents sold in the first fiscal quarter to 1,443.6 kilogram equivalents sold in the second quarter. Cannabis oil sales, as a percentage of volume, decreased to 19% of overall sales from 39% in the prior quarter, reflecting the higher percentage of dry bud sold in the adult-use market.

In addition to that, the average selling price, inclusive of the excise tax, declined to C$6.54 per gram in the quarter, compared to C$7.12 in the prior quarter. Sales to the adult-use market, which had a lower average selling price of C$6.32, inclusive of excise tax, compared to C$7.51 in the medical-use market.

“This is the first quarter to partially include adult-use sales, helping to drive 63% quarter-over-quarter net revenue growth, as did continued strength in sales to the medical-use market,” said Chief Executive Officer Vic Neufeld. “As expected, gross margins declined, reflecting lower effective selling prices in the adult-use market, as well as temporarily lower yields and higher production costs in the quarter as we moved aggressively to build out production facilities and implement new automation processes.”

The cash cost to produce a gram of dried cannabis rose from C$1.30 last year to C$1.76 in this past quarter. The “all-in” cost of goods sold also rose from last year’s C$1.83 to C$2.60.

Expenses in the quarter rose to $27.5 million, from $24.1 million in the prior quarter and $7.3 million in the prior year, which the company attributed to higher headcount and employee-related costs, following the acquisitions of Nuuvera Inc. and LATAM Holdings, and as a result of investing $2.6 million in brand development prior to the implementation of The Cannabis Act. It said that as a percent of net revenue, SG&A declined to 127% from 181% in the prior quarter, reflecting improved operating leverage on the Company’s growing revenue base.

New Leadership

The company did not address the issues it has had over the past few months with Hindenburg Research, the short seller who criticized company management. It did say that Aphria’s CEO Vic Neufeld, and Co-founder Cole Cacciavillani were both nearing the end of their five-years with the company and would transition out of their executive roles over the coming months but remain on the Board.

“Succession is the plan. Cole and I have informed the Board, and they have agreed, that we will begin the transition process immediately, and at the appropriate time, we will both step down from executive positions at Aphria,” said Neufeld.

Looking Ahead

“A top priority for Aphria is expanding production and automation to secure our long-term cost and scale advantages,” said Neufeld. “The Part IV and V expansions of Aphria One are now complete and awaiting Health Canada approval, while an application for a cultivation license at Aphria Diamond has been submitted and is awaiting pre-cultivation inspection. Based on this, we now expect to generate first sales from these new facilities later in the calendar year, pending Health Canada approvals, with our annualized harvest reaching 255,000 kilograms, compared to 35,000 kilograms currently, by the end of calendar 2019.”

He went on to add, “In the second quarter we also positioned the Company for long-term growth in key global markets with strategic alliances, targeted investments, and disciplined acquisitions. We’re excited to have just closed the previously announced acquisition of CC Pharma, based in Germany, which distributes pharmaceuticals and medical cannabis to over 13,000 pharmacies. This transaction positions Aphria to be a leading player in the European medical cannabis market. We’re equally optimistic about our recently announced alliances and acquisitions of highly strategic licenses and operations in Latin America and the Caribbean’s most attractive emerging cannabis markets, including Colombia, Argentina, Paraguay, and Jamaica.”

 

 


StaffStaffDecember 31, 2018
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The hostile bid for Aphria Inc. (APHA) by Green Growth Brands Ltd., also known as Xanthic Biopharma Inc. (CSE: GGB) caused the stock to finally move higher rising over 12% to trade at $6.26 after a month of heavy selling. Aphria has faced a storm of negative attacks by the short seller Hindenburg Investment Research (HIR)  which questioned the company’s Latin American investments.

When HIR issued a report detailing the issues it had with Aphria’s investments as a justification to short the stock, the stock fell. This is a typical move by short sellers. They issue a highly negative report on the company it has shorted and if it gets some attention and the stock falls then the goal is accomplished. Supporters of Aphria fought back refuting parts of the report, but the stock continued to slide as wary shareholders decided it was best to sell. Aphria said it was also going to address HIR’s report in detail, but so far it hasn’t.

Aphria said in a statement, “The (HIR) report makes reference to the Company’s LATAM acquisition which closed on September 27, 2018. In connection with this transaction, the Board of Directors of Aphria confirmed that it received financial advice and a fairness opinion from a reputable firm that the consideration to be offered by Aphria in respect of the transaction was fair, from a financial point of view to Aphria and its shareholders.”

The company went on to add, “Investors should exercise caution in relying on the misrepresentations and distortions contained in the report and recognize that, by their own admission, Hindenburg Research “…stands to realize significant gains in the event that the price of any stock covered herein declines.”

On Thursday after the market close, Green Growth announced it would an acquisition that would “Provide 1.5714 common shares of Green Growth representing premiums of 45.5% over Aphria’s closing price on the Toronto Stock Exchange on December 24, 2018, and 46.0% over Aphria’s volume weighted average price on the TSX for the last 10 trading days ended December 24, 2018.  The offer values Aphria at approximately C$2.8 billion (US$2.1 billion) based on a valuation of C$7.00 per share for Green Growth Shares.” It didn’t take long for the market to point out that Green Growth’s shares were trading at C$7 and even though the share price did rise on Friday, it only went to C$5.11.

Aphria addressed this in its statement saying, “Aphria shareholders should be aware that the value of GGB’s per-share offer is based on a hypothetical valuation of its own shares, with no relation to the current price.”

Irwin Simon, the new Chair, said, “While we appreciate GGB’s interest in the value we have created at Aphria and our significant growth prospects, their proposal falls short of rewarding our shareholders for participating in such a transaction.  Further, the proposed offer is quite risky given GGB’s condition to complete a brokered financing at a price that is more than double the recent average of their share price, as a key term to the proposal.”

It’s worth noting that Simon has just replaced the CEO Vic Neufeld as Chair as of December 27, right after the bid was made public. Aphria issued a press release removing Neufeld from his role as Chairman but retaining him as CEO. He will also remain on the board as a Director. Neufeld has been identified by HIR as part of the problems at Aphria.

Simon added, “The Board has determined that the GGB proposal, as it currently stands, significantly undervalues the company.  Aphria has a tremendous market opportunity as a leader in the sector and a strategic vision to meet those opportunities.  Our focus is to realize that value for the benefit of all our shareholders.”

The deal has been criticized by HIR, which was expected since it caused the stock to go higher, which is exactly what HIR doesn’t want to happen. However, other cannabis industry investors have criticized the deal as well. Most point to the wished for valuation of C$7 for GGB shares. The deal has been characterized as “hostile,” but it is hardly hostile if the two companies share executives on advisory boards and have shared investors.

Whether the two companies combine or not will be up to the remaining shareholders. Green Growth’s CEO Peter Horvath says he has 10% of the support of Aphria’s shareholders. If this was just a publicity stunt (as some believe) to gin up both company’s stock prices, it worked.

 

 


William SumnerWilliam SumnerDecember 12, 2018
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5min2250

It’s time for your Daily Hit of cannabis financial news for December 12, 2018

On the Site

Aphria Continues International Push With Paraguay Despite Criticism

Aphria Inc.  (TSX: APHA) (NYSE: APHA) continues to forge ahead with its international expansion despite coming under fire from a short seller recently. Recently, Hindenburg Investment Research and Quintessential Capital Management released their short report on the company and questioned some of Aphria’s overseas investments causing the stock to plunge and triggering price target reductions by analysts.

Senate Votes To Pass 2018 Farm Bill, Next Stop Is The House

The 2018 Farm Bill has passed in the U.S. Senate with a vote of 87-13. The legislation goes to the House next for a vote and if it passes there, it will head to the President’s desk to be signed. Hemp will be switched for review to the Department of Agriculture and away from the Justice Department.

LeafLink Says Alaska, Maryland Most Expensive Place To Buy Cannabis

Earlier this week, the cannabis technology platform LeafLink released its 2018 Wholesale Cannabis Pricing Guide and the company learned that Alaska and Maryland are the two most expensive states to buy legal cannabis, followed by Nevada and California.

In Other News

GTEC Holdings Ltd.

GTEC Holdings Ltd. (TSXV: GTEC), a vertically integrated cannabis company, announced today that it had been approved for up-listing of trading onto the OTCQB Venture Market. Effective immediately, the company will start trading on the OTCQB under the symbol GGTTF.

mCig Inc.

mCig Inc. (OTCMKTS: MCIG) announced that Cal Acres Inc., a California company with majority ownership by MCIG, has received its Type-11 Distribution Temporary license from the state of California. Though the company has not completed construction on its distribution facility, Cal Acres may use its license to purchase and store product in a rented facility for the time being. Cal Acres expects that it will receive its cultivation and manufacturing licenses over the next several weeks. “Obtaining a temporary distribution license allows us to interact with the thousands of California Cultivators, Manufacturers, and Distributors… It’s a new launching pad for our future brands,” said Paul Rosenberg, CEO of MCIG Inc.

Mary’s Tech CA

Mary’s Tech CA has announced the opening of a 1,500 square foot manufacturing and distribution facility in Grover Beach, California. The climate-controlled facility utilizes proprietary automation equipment and a high-performance liquid chromatography machine for in-house testing. “We are pleased to officially be operating under our own BCC manufacturing and distribution license and to be in full control of the operations pipeline,” said Lynn Honderd, CEO of Mary’s Tech CA, Inc. “Partnering with EVIO Labs, a premier provider of analytical testing and research, as well as utilizing a robust distribution team, will result in improved efficiencies across the board. Ensuring that patients and consumers in California have consistent access to clean, reliable and accurately dosed products is the utmost importance to us.”


Debra BorchardtDebra BorchardtDecember 12, 2018
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9min6280

Aphria Inc.  (TSX: APHA) (NYSE: APHA) continues to forge ahead with its international expansion despite coming under fire from a short seller recently. Recently, Hindenburg Investment Research and Quintessential Capital Management released their short report on the company and questioned some of Aphria’s overseas investments causing the stock to plunge and triggering price target reductions by analysts.

On Wednesday, Aphria said it signed a Letter of Intent with Insumos Medicos S.A.  a Paraguayan pharmaceutical manufacturing, import, and distribution company, to enter into an exclusive supply and distribution agreement to provide medical cannabis in Paraguay.

“Latin America continues to represent an important growth opportunity within the global medical cannabis industry, and we are excited to be among the first to enter the rapidly emerging market in Paraguay,” said Jakob Ripshtein, President of Aphria. “Our strategic partner, Insumos, is well-positioned to establish a leading presence for the Company’s products throughout the country. Aphria will continue to expand its footprint in the most strategic markets in Latin America and around the world through its diversified approach to innovation, partnerships, and expansion.”

According to Aphria, Insumos is a distributor of pharmaceuticals to hospitals within Paraguay. Insumos has the network, relationships, and reach to bring Aphria’s products to patients in need across the country. As part of the proposed agreement, Insumos will undertake the registration of Aphria’s products with Paraguay’s Ministry of Public Health and Social Welfare and appropriate licensing for the import of medical cannabis.

The company said that once the deal is closed Paraguay will become the third market in Latin America, following Argentina and Colombia in which Aphria products will be distributed.

Short Seller Response

With regards to the short seller report, Aphria said in a statement, “Investors should exercise caution in relying on the misrepresentations and distortions contained in the report and recognize that, by their own admission, Hindenburg Research “…stands to realize significant gains in the event that the price of any stock covered herein declines.”

The company went on to add, “The report makes reference to the Company’s LATAM acquisition which closed on September 27, 2018. In connection with this transaction, the Board of Directors of Aphria confirmed that it received financial advice and a fairness opinion from a reputable firm that the consideration to be offered by Aphria in respect of the transaction was fair, from a financial point of view to Aphria and its shareholders.”

LATAM Defence

Aphria also fired back with regards to the points that Hindenburg made about the LATAM investments. The company said that its Board of Directors received financial advice and a fairness opinion from Cormark Securities Inc., the company’s independent and qualified financial advisor, which said the transaction was fair, from a financial point of view to Aphria. Aphria also said that it believes that the purchase price paid under the transaction was comparable with similar Latin America acquisitions by other large-cap, Canadian licensed producers.

The company also said that it retained counsel in each jurisdiction that completed extensive legal due diligence on the assets, licenses and businesses in each jurisdiction. Aphria said it sent executives to Colombia, Argentina, Jamaica, and Brazil to conduct due diligence regarding the assets to be acquired which included management meetings. Plus the company said it made site visits in each country and met with local authorized representatives.


Debra BorchardtDebra BorchardtNovember 8, 2018
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3min7121

Aphria Inc. (NYSE: APHA)  is acquiring German-based CC Pharma GmbH, a leading distributor of pharmaceutical products to more than 13,000 pharmacies in Germany. Aphria considers the country a key part of its international expansion.

According to the company statement, Aphria will pay €24.5 million in cash to CC Pharma at closing, with an earn-out multiple on future EBITDA of up to another €23.5 million following closing, if certain performance milestones are met. The acquisition is expected to close in January 2019.

Aphria International had previously signed a deal with CC Pharma to export roughly 1,200 kilograms of medical marijuana from Canada to Germany. CC Pharma was founded in 1991 and is a leading importer and distributor of EU-pharmaceuticals for the German market, with over €200 million in annual revenue.  A new division will be created in CC Pharma dedicated to medical cannabis.

“This acquisition strengthens our foothold in Germany, one of the most highly sought-after medical cannabis markets in the world,” said Vic Neufeld, CEO of Aphria. “CC Pharma is cash-flow positive and has significant experience with regulatory requirements and international logistics. It will be a strong addition to Aphria’s presence in Germany, providing deeper access to the important pharmacist channel and advancing our ambitious global growth strategy.”

This isn’t the first effort made by Aphria in Germany. Earlier this year, the company acquired a 25.1% interest in Berlin-based Schöneberg Hospital to support education about the benefits of medical cannabinoids. This was the first step in Aphria’s plans to build and operate pain treatment centers throughout Germany.

“We are focused on leading the way in the medical cannabis market in Germany,” said Hendrik Knopp, Managing Director of Aphria Germany. “By combining Aphria’s expertise with CC Pharma’s established local market presence, we are well positioned to continue on that journey.”

In order to maintain consistent medical marijuana deliveries, Aphria plans to build one of the biggest state-of-the-art GMP certified cannabis vaults in Bad Bramstedt, northern Germany, with a storage capacity of 5,000 kilograms. In addition to that, Aphria is planning on building a Research and Development indoor growing facility in Neumünster, Germany.



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