Aphria Inc Is Today's Cannabis Focus

While most US cannabis investors are focused on home grown marijuana plays, up in The Great White North there’s a lot happening. By 2024, Health Canada projects that the medical cannabis market in Canada will reach $1.3 billion and have ~450,000 patients out of a population of 35 million.Prime Minister Justin Trudeau was elected after including legalization of recreational marijuana. On April 20th, 2016, the Canadian Health Minister Jane Philpott announced that Canada would introduce legislation to decriminalize and regulate cannabis in spring of 2017. The recreational market in Canada is estimated to be worth $7 to $10 billion.One company investors need to pay attention to is Aphria Inc. The stock trades in Canada under the symbol APH, in the US under APHQF, and in Germany under 10E.Aphria Inc., one of Canada's lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada, Aphria is truly powered by sunlight, allowing for the most natural growing conditions available. The company is committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders. Aphria is the first public licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters.Last week, Aphria entered into an Intellectual Property transfer agreement with Copperstate Farms, LLC. Arizona's medical cannabis program was approved by voters in 2010. At the same time as securing a licence to produce and sell medical cannabis, Copperstate purchased a 40-acre (equivalent to 1.7 million square feet) high-tech, Dutch style greenhouse facility in Snowflake, AZ. Copperstate has one of the largest medical cannabis greenhouse facilities in Arizona. As part of the transaction, Aphria will share its accumulated knowledge, gained during its 5-year MMAR/MMPR/ACMPR journey, related to growing cannabis in greenhouses in exchange for a 5% 'cashless' membership interest in Copperstate, entitling Aphria to 5% of the free cash flow generated by Copperstate.Also last month, Aphria partnered with MassRoots Inc (OTCMKTS:MSRT) to help build awareness of the Aphria brand amongst its Canadian userbase. On Monday, October 17, 2016, Aphria, Inc. invested $250,000 USD in MassRoots by purchasing 500,000 shares of MassRoots common stock, along with receiving warrants to purchase an additional 500,000 shares at $0.90 per share, valid until October 17, 2019. MassRoots is one of the largest and most active technology platforms for cannabis consumers, businesses and activists with over 900,000 registered users.Aphria has its eye on the recreational market after it signed a licensing deal with Tokyo Smoke, a premium cannabis-oriented lifestyle brand. The transaction will be the first-of-its-kind in Canada as it combines a premium consumer lifestyle brand and a licensed producer and seeks to pave the way for how future cannabis brands operate in Canada. The deal will allow Aphria to ship Tokyo Smoke branded cannabis in Canada to registered patients through the Access to Cannabis for Medical Purposes Regulations (ACMPR) system, which will be available online by year's end. CEO Vic Neufeld said:

"Aphria is one of the most trusted producers of medical cannabis, and this partnership with Tokyo Smoke affirms our commitment to expand and diversify our product offering and market channels. When cannabis is legalized for recreational use in Canada, a strong brand will be one of the key differentiators for patients and consumers, and we're committed to working with Tokyo Smoke to be the first premium cannabis brand in Canada."

Aphria is also geared up for increasing production. In September, the company announced a fully funded $24.5 million capital project as the first phase of its Part III expansion. The project will increase Aphria's capacity under the Access to Cannabis for Medical Purposes Regulations ("ACMPR") from 100,000 square feet to 300,000 square feet and is expected to increase the Company's ACMPR compliant growing capabilities from 5,500 kgs annually to 18,000 kgs annually. The project includes 200,000 square feet of state-of-the-art Dutch style greenhouses, 21,000 square feet of infrastructure, including four Level 9 vaults, automation for both the greenhouses and processing areas and security consistent with ACMPR standards.Aphria anticipates completion of this phase of the project within 12 months, Health Canada approvals within 4 months of completing the expansion and reaching full crop rotation within 4 months after Health Canada approval. Aphria is in the midst of completing its previously disclosed 57,000 square foot Part II expansion, which is expected to increase production capacity from 2,600 kgs annually to 5,500 kgs annually and is on target for completion in December with full crop rotation by June 2017.Revenue for the three months ended August 31, 2016 was $4,375,512, representing a 58% improvement over the prior quarter's revenue of $2,776,316. The increase in revenue for the quarter was primarily a result of increased demand as measured by kilogram (or kilogram equivalents) sold. The Company grew EBITDA 102% in the quarter to $1,054,269, the first time a public Licenced Producer ("LP") has reported more than $1 million in EBITDA, without including the fair value increase in biological assets. The EBITDA growth reflects the strong growth in kilograms (or kilogram equivalents) in the quarter.Aphria looks to be one of the best plays in not only Canada, but also in the entire cannabis space. We believe investors should look towards Canada for not only its favorable regulatory environment, but also well-financed and well-run companies like Aphria. We will be updating our subscribers with the latest on Aphria and other cannabis names. For complete coverage, sign up below!Disclosure: We have no position in Aphria Inc and have not been compensated for this article.