Aphria Inc (OTCMKTS:APHQF) will focus more on the Canadian market. The company revealed this in a September 6, 2018 press statement. To that end, the company divested all its assets in the American market. The statement notes that the divestiture comes after due notification process to the staff and investors.
Further, the statement details that Aphria agreed with “a group of buyers” who will take over the 64 million shares. The company had 100% ownership of Health Sciences, Inc. The subsidiary ran all the Aphria operations in the American cannabis market. However, as part of the terms of the divestiture, Aphria will retain “an irrevocable option to repurchase the Shares or any replacement securities from the buyers for a period of up to five years, subject to the satisfaction of certain conditions.”
Some of the conditions require Aphria to make “a pro rata cash payment” to every single buyer of Liberty shares. Additionally, Aphria will repurchase the shares subject to nationwide legalization of cannabis in the US. Lastly, the repurchase will happen on condition that the Toronto Stock Exchange approves the exercise.
Legal hindrance for Aphria Inc (OTCMKTS:APHQF) to operate optimally
As per Vic Neufeld, CEO of Aphria, the federal legal framework of the US is unfavorable to the medical cannabis business. In fact, company statistics show that it encountered substantial losses in the market. In his words, he says:
“Given the current federal legal framework in the United States, we have made the strategic decision to divest our remaining U.S. holdings at this time in order to permit us to focus on other more immediate capital markets and strategic opportunities in Canada and in other legal markets around the world. Not only does this transaction result in a significant gain to the Company it also enables Aphria to advance its existing global strategic plan unencumbered by U.S. exposure at this time.”
As part of the strategy to establish itself in the new primary market, the company is making strategic partnerships. According to a September 12, 2018 press release, Aphria Inc (OTCMKTS: APHQF) will co-supply medical cannabis products in Canada. The company partnered Emblem Cannabis Corp., which will see them supply 175 tons of cannabis products within five years. As part of the deal, Aphria will take ownership of some of Emblem’s shares.