Marijuana company Aphria selling part of its stake in Liberty Health Sciences

Licensed medical marijuana producer Aphria Inc. has signed a deal to sell part of its stake in Liberty Health Sciences Inc. as it works to reduce its investments in the United States where cannabis remains illegal under federal law.

The Leamington, Ont.-based company is selling 26.7 million Liberty shares at a price of $1.25 per share, representing all its shares in the company that are not subject to Canadian Securities Exchange escrow requirements. Aphria will maintain a 28.1 per cent interest in Liberty after the transaction is complete.

Individual members of the Serruya family — which made their fortune by founding frozen yogurt chain Yogen Fruz — are buying 80 per cent of the shares, while Delavaco Capital is buying the remaining 20 per cent.

“While I continue to believe there is tremendous opportunity in the U.S. for medical cannabis, the sale of these shares serve the best interests of our shareholders,” said Vic Neufeld, Aphria’s chief executive officer in a statement Monday.

He added that the company is committed to work with the operator of the Toronto Stock Exchange to adhere to a TMX Group notice late last year, which warned that marijuana companies operating in U.S. states where cannabis is legal are not in compliance with its listing requirements. The TMX said U.S. federal law, which classifies marijuana as an illegal schedule 1 drug, trumps state law and those in violation could face a delisting review.

Many Canadian cannabis companies dealt with the hazy legal landscape by either listing on the smaller and less-risk averse Canadian Securities Exchange or by focusing on markets outside of the U.S.

But in April 2017, Aphria announced the launch of its U.S. expansion strategy through a strategic investment in an entity that was later renamed Liberty Health Sciences. Aphria also licenses its medical brand of cannabis to Liberty for a royalty.

Meanwhile, last month, U.S. Attorney General Jeff Sessions rescinded an Obama-era memo that suggested that the federal government would not intervene in states where cannabis is legal, leaving the door open for legalization in several states including California and Florida. Instead, Sessions said he was leaving it to federal prosecutors in those states to decide how aggressively to enforce federal law.

Sessions’ rescission prompted the umbrella organization for Canada’s provincial and territorial securities regulators to take another look at its disclosure-based approach for issuers with U.S. marijuana-related activities, and whether it “remains appropriate.”

Monday’s agreement also comes just days after Aphria signed a $20-million deal to sell its minority interest in Arizona cannabis company Copperstate Farms to Liberty, a transaction which is expected to close in the second quarter, as part of its efforts to reduce its direct involvement in U.S. medical marijuana.

Once the sale of the portion of Aphria’s stake in Liberty is complete, the licensed producer will retain an ownership position of 28.1 per cent of the issued and outstanding shares.

In addition, Aphria chief executive Vic Neufeld will remain chairman of the Liberty board and John Cervini, Aphria’s vice-president, infrastructure and technology will remain a director.

The transaction also includes an option agreement for the remainder of the company’s shares, which are currently subject to the CSE mandatory escrow requirements. The deal also includes an opt-out in the event that the TSX amends its regulations to permit U.S.-based cannabis investments. Under that scenario, the option agreement would be automatically terminated and Aphria would pay its buyers a $2.5-million termination fee on a pro-rated basis.

Companies in this story: (TSX:APH)

Armina Ligaya, The Canadian Press

Just Posted

Heat warning in effect for Central Alberta

Environment Canada has issued a heat warning for Central Alberta. Residents in… Continue reading

Red Deer Royals place second at Calgary Stampede parade

Royals depicted life in forest and portrayed destruction by human beings

Westerner Days parade set for Wednesday in downtown Red Deer

Over 30,000 people are expected to line up the streets of downtown… Continue reading

Storm rips through Central Alberta

Hail pelts region causing damage to farmland, plus communities in Ponoka, Bashaw and Stettler

France wins 2nd World Cup title, beats Croatia 4-2

MOSCOW — France won its second World Cup title by beating Croatia… Continue reading

CFIA inspects after video shows pigs crammed into B.C. transport truck

The video shows pigs piled on top of one another in a transport truck on a “sweltering” hot day last week

Man killed by Chicago police ran away, reached for waist

CHICAGO — A man killed by Chicago police had a gun in… Continue reading

Chicago police: Man killed by police appeared to be armed

CHICAGO — Footage from body-worn cameras and surveillance cameras shows that a… Continue reading

New Mexico passenger bus crash kills 3, injures 24 others

BERNALILLO, N.M. — A crash involving a commercial passenger bus and three… Continue reading

Police officer, bystander die from gunshot wounds

BOSTON — A Massachusetts police officer and bystander died Sunday from wounds… Continue reading

Trump names EU a global foe, raps media before Putin summit

HELSINKI — President Donald Trump named the European Union as a top… Continue reading

Stolen firetruck stopped after wild chase in California

SACRAMENTO, Calif. — Police chased a stolen firetruck across four Northern California… Continue reading

Storm rips through Central Alberta

Hail pelts region causing damage to farmland, plus communities in Ponoka, Bashaw and Stettler

Activists protest outside Kinder Morgan terminal in kayaks, canoes in B.C.

Tsleil-Waututh elder Ta’ah Amy George led the water ceremony from a traditional Coast Salish canoe

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month