APHRIA INC COM NPV (OTCMKTS:APHQF) is a key player in the Canadian cannabis patch, and one of the few top plays, stacked with cash, and limited more by trying to model ROI on that cash than by market obstacles. The latest out of APHQF is a round of applause for the Ontario government’s newly proposed retail and distribution model of legalized recreational cannabis. According to the release, this marks an important step forward for the province and a responsible step forward for the industry with the introduction of a model that will help restrict access to youth, protect the health and safety of Ontarians, and keep profits out of the hands of the black market.
“The proposed approach by the Ontario government is a great beginning with the earmarkings of a model that the cannabis industry can work with as time marches on,” said Vic Neufeld, Chief Executive Officer of Aphria. “Aphria shares the government’s commitment to ensuring a safe and sensible approach to the sale and distribution of recreational cannabis, and we look forward to working with all levels of government to position Ontario’s cannabis market as a global leader.”
APHRIA INC COM NPV (OTCMKTS:APHQF) bills itself as a company that produces, supplies, and sells medical cannabis in Canada. Its cannabis products include dried flowers and cannabis oils. APHQF sells its products through its online store and telephone orders, as well as MMPR licensed producers.
According to press materials, “APHQF is one of Canada’s lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada. APHQF is truly powered by sunlight, allowing for the most natural growing conditions available. We are committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders. We are the first public licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters.”
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As noted above, APHQF’s management feels strongly about the positive nature of new measures introduced by the Ontario government as a new retail and distribution model of legalized recreational cannabis.
The company’s CEO continued: “With the introduction of legalized recreational cannabis, Aphria is uniquely positioned to meet the expected surge in demand from Ontarians. We have a sound recreational strategy and plans are well underway to offer consumers a variety of cannabis products that meet the needs of the recreational market. Relative to our peers, Aphria firmly believes that our approach to marketing, product quality, safety and leveraging Aphria’s pricing are all aligned with the government’s objectives. This prudent strategy gives us a competitive advantage that will serve customers, shareholders and Aphria, both now and as the industry grows.”
“From day one, our expertise and experience has enabled us to effectively grow to scale and become one of the lowest cost producers. Our four-part expansion, expected to be completed in July 2018, will bring Aphria’s greenhouse growing footprint to 1 million square feet and increase our capacity to supply more than 100,000 kg of high-quality cannabis. By leveraging our strengths, Aphria will be able to adequately serve Ontarians as well as the rest of the country when the recreational model is introduced in 2018.
“While access to the market for consumers is important, quality and safety is paramount. The production of high-quality product has always been Aphria’s number one priority, no matter our size or as the industry evolves. We strongly believe there needs to be industry wide strict enforcement and quality control measures to ensure consumers always have access to a safe, high-quality product.”
Currently trading at a market capitalization of $688.41M, APHQF has a significant war chest ($79.9M) of cash on the books, which must be weighed relative to about $1.6M in total current liabilities. One should also note that debt has been growing over recent quarters. APHQF is pulling in trailing 12-month revenues of $20.4M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 106%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $APHQF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: We hold no position in $APHQF, either long or short, and we have not been compensated for this article.