Aphria leaving US market

Aphria selling stake in U.S. pot producer in $20M deal
Move meant to keep Aphria onside with Canadian stock regulators, markets
CBC News · Posted: Feb 02, 2018 9:35 AM ET | Last Updated: an hour ago

Marijuana producer Aphria Inc. is selling its stake in an Arizona-based pot grower, a move meant to help keep Aphria from running into issues with Canadian regulators and stock market operators. (Jim Mone/Associated Press)
Canadian marijuana producer Aphria Inc. on Friday announced a deal to sell its holding in Arizona cannabis company Copperstate Farms to Liberty Health Sciences Inc. for $20 million.

The move is aimed at helping Aphria avoiding issues with Canadian equity markets and regulators. Back in October, the Canadian Securities Administrators set out "specific disclosure expectations" for marijuana industry firms with investments in the U.S., while TMX Group Limited, which operates the Toronto Stock Exchange, said it might move to delist stocks of marijuana companies with operations in the U.S.

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In addition, U.S. Attorney General Jeff Sessions in January rescinded an Obama-era memo that suggested that the federal government would not intervene in states where the marijuana is legal.

Vic Neufeld, Aphria's chief executive officer," said in a release that the sale of Copperstate is an important step in the company's efforts to work collaboratively with the TSX and Canadian securities regulators regarding the divestiture of its direct investment in the U.S. cannabis business.

"We are assessing solutions that meet the needs of Aphria while protecting shareholder interests and maintaining shareholder value," Neufeld said.

Aphria holds a minority stake in Liberty Health Sciences. A recent report suggested Aphria is planning to sell 25 per cent of its 38 per cent stake in Liberty. A spokesperson said Aphria is "exploring and considering strategic alternatives with respect to its U.S. cannabis related interests, including the possible divestiture of its investments to strategic, long-term and committed investors in the cannabis industry."

Based in Snowflake, Ariz., Copperstate owns approximately 1.7 million square feet of greenhouses, of which approximately 348,000 square feet are in production of medical cannabis.

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Aphria shares were down more than 12 per cent in Friday morning trading on the TSX at $13.58 amid a general market sell-off.

The Canadian cannabis market has seen a wave of consolidation recently with Aurora Cannabis striking a deal to acquire CanniMed, while Leamington, Ont.-based Aphria buying Broken Coast Cannabis in a $230-million agreement.