The relationship between two Canadian licensed producers (LPs) soured on Tuesday (October 8) after a cannabis supply agreement was dropped.

At the market’s opening, Aleafia Health (TSX:ALEF,OTCQX:ALEAF) informed shareholders it is scrapping a five year deal for up to 175,000 kilograms of cannabis products between Emblem, an Aleafia subsidiary that was once a publicly traded marijuana firm, and Aphria (NYSE:APHA,TSX:APHA).


In a statement, Aphria expressed disappointment with its fellow Canadian LP for the canceled transaction. The cannabis producer, which is valued at nearly C$2 billion, said it intended to fulfill its side.

 

Cannabis - Will The Fortune 500 Join The Party?

 
Our Exclusive FREE Report Contains Information You NEED To Know About Cannabis Stock Investing!
 

“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,” Aphria said.

The larger producer stated that this change has now opened up “significant supply” to service its own brands, instead of selling to a fellow producer.

Aleafia completed an all-share acquisition worth C$173.2 million for Emblem in March. At the time of the acquisition, Aleafia CEO Geoffrey Benic praised Emblem for holding “highly coveted supply agreements,” which he said would complement his own company’s operations.

Shares of Aphria and Aleafia declined in value on Tuesday by 1.68 percent and 1.18 percent, respectively. Aphria closed the trading session at a price of C$7.03, while Aleafia finished at C$0.84

Aphria and Emblem originally signed the supply agreement in September 2018. The deal would have given Aphria the responsibility of delivering 25,000 kilograms of cannabis products during the first year of the agreed-upon five year transaction.

Aleafia indicated that Aphria failed to meet its “supply obligations” under the overall agreement.

As part of the original deal, Aphria was awarded a non-refundable deposit of C$22.8 million, split between nearly 7 million shares of Emblem and C$12.8 million in cash.

At the time, Gregg Battersby, vice president of commercial strategy at Aphria, said the firm would be able to complete the terms of the deal thanks to its increasing capacity. The executive had projected Aphria would reach 255,000 kilograms of capable production in early 2019.

“We are pleased to be able to support Emblem with a supply of high-quality cannabis grown in our Leamington greenhouses, while securing healthy revenue and margins for Aphria over the next five years,” Battersby said in the original confirmation for the deal.

 

Cannabis - Will The Fortune 500 Join The Party?

 
Our Exclusive FREE Report Contains Information You NEED To Know About Cannabis Stock Investing!
 

Aphria indicated that the cannabis deliverables would ramp each year, with the first year of the deal, May 1, 2019 to April 30, 2020; as mentioned, this first year would require the supply of 25,000 kilograms.

The amount of product would grow per year by 5,000 kilograms per term.

According to Aleafia, its own operations will not be impacted by the termination of this significant supply agreement between Emblem and Aphria.

On Monday (October 7), Aleafia confirmed it has completed the buildout for a second phase expansion at a facility in Paris, Ontario. This expanded facility, sized at 30,000 square feet and running under the Emblem umbrella, will submit its final evidence package to Canadian regulators in October.

The facility is designed to serve the interests of Aleafia, with extraction services for products in the health and wellness segments. It will be capable of producing 115,000 kilograms of dried flower equivalent by way of extraction capacity.

Aleafia emboldened by recent market failings

Benjamin Ferdinand, CFO of Aleafia Health, previously told the Investing News Network that his firm was looking to take advantage of recent misses from fellow cannabis producers such as CannTrust Holdings (NYSE:CTST,TSX:TRST).

“We’re able to very quickly take advantage of opportunities in the market,” Ferdinand said after Aleafia announced it had seen a recent uptick in its medical cannabis patient count.

CannTrust was forced to stop supplying its patient base after irregularities were found at its operations out of Pelham, Ontario. Health Canada has since issued a suspension to the producer’s marijuana production operations.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

 

Cannabis - Will The Fortune 500 Join The Party?

 
Our Exclusive FREE Report Contains Information You NEED To Know About Cannabis Stock Investing!
 

Cresco Labs (CSE:CL) (OTCQX:CRLBF) (“Cresco Labs” or “the Company”), a vertically integrated multistate operator and the number one U.S. wholesaler of branded cannabis products, announced today the opening of a new Sunnyside dispensary in Wyomissing, Pennsylvania. Wyomissing will be Cresco Labs’ fifth dispensary in Pennsylvania and 38 th nationwide.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20211021006075/en/

Keep reading... Show less

The world of cannabis consumption is set to change radically, thanks in large part to the advancement of state-of-the-art research on the plant itself.

Medical cannabis products have already allowed many new users to discover the plant’s potential, but decisive research will help build a foundation for more sophisticated medical offerings.

Keep reading... Show less

Medical cannabis company continues rapid expansion with more than 100 dispensaries in Florida

Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) (“Trulieve” or “the Company”), the largest multi-state operator (MSO) in the United States today announced the reopening of a dispensary in the Arrowhead area of Jacksonville, Florida . The location is Trulieve’s 102 nd in the state of Florida and was formerly branded as Harvest House of Cannabis.

Keep reading... Show less
  • David Tsur’s 40 years of Biotech experience further strengthens the Board at a critical phase of the Company’s growth
  • His appointment reinforces the Company’s primary focus on becoming a Biotech leader, leveraging the power of its platform technology to disrupt multiple business verticals

BioHarvest Sciences Inc. (CSE: BHSC) (FSE: 8MV) (“BioHarvest” or the “Company”) today announced that David Tsur has agreed to serve as a non-executive director of BioHarvest. The appointment is effective immediately.

Cannot view this image? Visit: https://orders.newsfilecorp.com/files/6168/100441_06b50bfd24fbb94f_006.jpg

Keep reading... Show less

High-Quality Cannabis Products That Are “Made for Music” Will Expand Accessibility in 2022

Curaleaf Holdings, Inc. (CSE: CURA OTCQX: CURLF) (“Curaleaf” or the “Company”), a leading international provider of consumer products in cannabis, is pleased to announce that its Select brand has reached an agreement with cultural authority Rolling Stone to expand the co-branded Rolling Stone by Select line to additional markets across the US. The cannabis products that are “Made for Music” will launch in California Arizona and Massachusetts in early 2022.

Keep reading... Show less