Aphria Set to Ramp Up Production After Health Canada Approval

Sanction by Health Canada more than triples Aphria Inc.’s (TSX:APH) production capacity of medical cannabis from 9,000 kg to 30,000 kg annually

SmallCapPower | March 14, 2018: Aphria Inc. (TSX:APH) announced on Tuesday the receipt of a license amendment from Health Canada, providing Aphria with additional production space of 200,000 square feet, as part of its Part III expansion at its facility in Leamington, Ontario. The sanction by Health Canada more than triples the Company’s production capacity of medical cannabis from 9,000 kg to 30,000 kg annually.

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The license amendment by Health Canada, which has the responsibility to maintain and improve public health, falls under the Access to Cannabis for Medical Purposes Regulations (ACMPR). As announced previously, the first crop cultivated and produced at the Part III expansion facility is going to be available for sale in the final week of May 2018.

Aphria’s CEO Vic Neufeld said, “This marks the completion of the third part of our four-part expansion plan and is another exciting milestone for Aphria. With more than three times the production capacity, we will continue to produce the highest-quality cannabis at one of the lowest costs in the industry. When completed early next year, our fully-expanded facility will provide over 1,000,000 square feet of production space and, when combined with our strategic relationship with Double Diamond Farms and our recent acquisition of Broken Coast Cannabis, will bring our anticipated production capacity to 230,000 kg per year. This will enable Aphria to meet the expected demand from the Canadian market, while allowing a significant portion to be allocated to key established international markets.”

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Aphria, one of Canada’s lowest-cost cannabis producer, currently has a market capitalization of $5.5 billion on the TSX with a price-to-earnings multiple of 71.25x. Future prospects of Aphria seem promising given the expansion of production capacity and strategic acquisitions/partnerships in order to meet the proliferating demand for medical cannabis as well as anticipated recreational marijuana usage once legalization occurs in Canada in the summer of 2018.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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