Aphria Secures License To Boost Cannabis Production Capacity By Over 250%

Aphria Inc APHA, which has spurned a takeover attempt by Green Growth Brands Inc GGBXF, announced Monday that it received approval from Health Canada to beef up its production capacity.

What Happened

Health Canada has granted Aphria a license amendment that will allow it to start production in an additional 800,000 square feet at its Aphria One location following the completion of Part IV and Part V expansions, the company said. 

Aphria One is a greenhouse the cannabis grower operates in Leamington, Ontario, which accounts for the bulk of its production. 

Once fully operational, Aphria said the expanded operation will produce an incremental 80,000 kg on an annualized basis, bringing the total production capacity at Aphria One to 110,000 kg. 

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Why It's Important

The procurement of the Health Canada license comes at an important juncture for Aphria, as it is fighting short-seller allegations that it is a shell company, with a cannabis business on the side.

The company also received flak for its acquisition of Latin American assets, with short sellers alleging that it benefited insiders and is not in the best interest of the company.

Additionally, Aphria is in the process of warding off an unsolicited offer from Green Growth brands, which the former feels significantly undervalues the company.

"Aphria's progress expanding production and automation is essential to our strategy of securing scale and long-term advantages that enable the evolution of the cannabis industry through product and brand innovation," interim CEO Irwin Simon said in a statement. 

"With Aphria One, we now have the ability to expand our production capacity by over three times."

What's Next

Aphria expects growing operations in the expanded facilities to commence without delay, as it has already used its previously approved capacity for growing mother and vegetative plants to be used as initial growing crops in Part IV and Part V.

"By this Friday, we will move swiftly to establish nearly 22,000 plants in the Part IV and Part V expansion, with an additional 12,000 plants added each week thereafter until we reach full crop rotation," the company said.

Aphria shares were up 2.96 percent at $10.44 at the time of publication Monday.

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