Aphria Inc. (TSE: APH) announced their move into Latin America with the purchase of production, distribution, and sales assets spread throughout Jamaica, Argentina, Colombia, and potentially Brazil.

Aphria paid equity investment Scythian Biosciences C$194 million for these assets with a further C$31 million to be paid for a Brazilian asset conditional on Scythian completing the purchase of this entity in the future.

Aphria’s move established the company as a first mover in Latin America with assets that will be producing even sooner than those purchased by Canopy Growth two weeks ago.

Though there are no bargains when it comes to marijuana assets, Aphria looks to have received much more current value for the purchase price than the international deal struck by Canopy Growth two weeks ago.

Aphria paid ~C$200 million for assets that are currently producing C$11 million of annual revenue and will grow to between C$50-$70 million by next year and potentially C$140 million annually in the future.

Aphria now owns a profitable and operational entity in Argentina as part of their C$200 million deal compared to Canopy Growth which paid C$73 million, 40% of their C$197 million LATAM purchase, just to hire the leader of their South American subsidiary.


What Assets did Aphria Buy?



Aphria now owns 90% of Colcanna S.A.S, a Colombian producer with 3 out of 4 needed licenses for CBD and THC cultivation and export.

The Colcanna greenhouse will be operational a full year before Canopy Growth begins their first harvest, giving Aphria a critical first mover advantage as sales and distribution channels are established.

The deal is contingent on Colcanna receiving their THC license, so by the time the deal closes they will have all the licenses needed to grow, process, and export THC and CBD products all over the globe.

Colcanna is currently building a 500k sq. ft. greenhouse that will be finished before the end of the year and will produce 30,000 kg a year at the start, growing to 50,000 kg over time.

With growing costs of $0.25 per gram, or 80% lower than in Canada, this asset can supply Aphria with some of the cheapest supply in the world as it seeks to undercut competitors and grow market share in Europe, Asia, and Latin America.

The Colcanna greenhouse will be operational a full year before Canopy Growth begins their first harvest, giving Aphria a critical first mover advantage as sales and distribution channels are established.


The purchase of ABP, S.A. gives Aphria a fully established medical channel to distribute medical marijuana in Argentina.

ABP, S.A. is the first company to receive a CBD import license and is working on research projects with two different hospitals to study the efficacy of CBD on assorted medical conditions.

Aphria purchased an entity that has already generated $11 million of revenue in 2017 and turned a profit, demonstrating a more prudent use of cash than many peers who paid millions for companies that require significant additional funding just to become operational.


Aphria purchased Marigold, one of only two growers licensed to build more than 22,000 sq. ft. of greenhouses.

Aphria will own 49% of Marigold but holds a 95% royalty interest in all revenue produced.

Marigold also has one of the few licences to build a retail medical marijuana store in Jamaica.

Growing costs in Jamaica are similar to Colombia, providing another cheap source of supply for Aphria to sell into higher value markets.


Solid Disclosure Sets Management Apart

Aphria’s press release announcing the transaction provided significantly more disclosure on insider holdings, related party transactions, and conflicts of interest than is typical in a normal cannabis company press release.

Vic Neufeld, CEO of Aphria, stepped down as chairman of Scythian in April to avoid conflicts of interest and forfeited over $2 million of stock in the process.

Ethical behaviour like this is unheard of in the cannabis space with management teams largely focused on removing value from the company as quickly as possible today so that investors will be left holding the bag tomorrow.

In addition, all directors of Aphria who held shares in Scythian, recused themselves from the board meeting when this deal was discussed and voted on.

Post the Nuuvera purchase investors are demanding more transparency and Aphria is delivering. They are going out of their way to earn back investors’ trust and make sure conflicts of interest are minimized or eliminated in future dealings.

In contrast Canopy Growth has been going the opposite direction, removing growing cost information in their latest quarterly earnings release, becoming less instead of more transparent with investors.

Aphria has always been the most transparent company in the cannabis industry, and we think this level of disclosure demonstrates the company is run by a management team that is second to none in the industry.

Backing a management team that operates ethically and transparently decreases your risk as an investor and increases the chance of making real money in this rapidly evolving industry.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.