Aphria Inks Deal with Schroll Medical

In its efforts to expand globally, Canadian licensed producer (LP) Aphria (TSX:APH) announced on Tuesday (September 4) that it has formed a partnership with Schroll Medical out of Denmark.

According to the press release, the partnership with Schroll Medical — which is a subsidiary of Schroll Flowers — will focus on cultivating medical cannabis and worldwide distribution of the drug.

Schroll Medical will account for an 85 percent interest in the partnership, with Aphria providing €100,000 in exchange for the remaining 15 percent interest in the partnership.

The partnership will assist in furthering Aphria’s plans of reaching an international scale, with the first product slated to become available in early 2019.

In addition to providing the funds, Aphria will also supply GMP certification consultation, cannabis genetics and strains and proprietary growing IP. The LP will also be responsible for handling the distribution of medical cannabis as a result of the partnership, which is slated to be made available in Germany, Luxembourg and Switzerland, to name a few.

“This marks another important step in advancing the availability of high-quality medical cannabis for across Europe and around the world,” Hendrik Knopp, managing director of Aphria Germany said in the release.

According to the announcement, Aphria will also have the option to increase its ownership interest to 50 percent and full liquidity under specific conditions.

“We are pleased to share a background in cultivation, look forward to applying the expertise and knowledge from Aphria to produce the highest standard of organic medical cannabis to reach patients in need around the world,” Carsten Schroll, founder of Schroll Flowers, said in the press release.

With Schroll Medical accounting for the majority interest in the partnership, the company will also be required for the European Union (EU) GMP-certified cultivation of organic medical cannabis. Schroll has meanwhile obtained its license to cultivate medical cannabis from the Danish Medicines Agency and has its property where production is already underway in a retrofit greenhouse.

The Phase 1 construction entails alterations to a 9,000 square meter facility that already exists as well as fabricating a new 1,000 square meter facility.

Shares of Aphria reacted positively to Tuesday’s announcement with a 9.25 percent jump to close at C$18.55. Aphria has a “Moderate Buy” ranking on TipRanks based off two analyst ratings with an average price target of C$$24.50.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.