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Aphria’s Vic Neufeld addresses shortages as cannabis goes legal in Canada

By Laura Kuhl
Oct 17, 2018

Aphria Inc. (TSX:APH) CEO Vic Neufeld recently spoke about the expected cannabis shortages in Canada. Last week, he told The Canadian Press that supply chain issues were affecting every major LP, but that Aphria would be back on track within three months.

“The pipeline fill is not going to be there,” Neufeld said. “But that’s just the short term.”

 

As they stand right now on opening day, cannabis supply chains are estimated to meet half of the legal demand barely. According to an analysis completed by the C.D. Howe Institute published last Thursday, the Canadian demand for marijuana is well over 600 tons. Unfortunately, the legal supply is only prepared to deliver a little over 145 tons. This is due to a number of different reasons, including staffing problems. Aphria attributes the lack of skilled staff to their shortage issues. Without staff to cultivate and maintain the greenhouses, much of Aphria’s cannabis supply went unharvested in time for the October 17 launch.

[EXCLUSIVE COVERAGE: CANADA LEGALIZES CANNABIS]

But even if Aphria is falling a little behind now, their potential continues to expand. PotNetwork reported earlier on the company’s fifteen percent jump in the market. The climb might have been motivated by optimistic rumors of a deal with Altria Group, but it still speaks to the Aphria’s reputation among cannabis investors and consumers. Regardless of the slow start on Wednesday, the company reports that they are on schedule to produce 255,000 kilograms of cannabis per year starting January 2019, putting them right on track with Neufeld’s earlier statements.

“While we experienced a short-term decline in adjusted earning in the first quarter, we continued to ramp up our production capabilities,...added considerable strength to our workforce, and continued to move forward aggressively with the implementation of our automation infrastructure, which is expected to streamline production,” Neufeld clarified in Aphria’s first-quarter earnings statement on October 12.

Aphria is in supply agreements with six territories in Canada and has sold over 7000 kilograms of cannabis since 2014. Their portfolio includes over thirty cannabis flower products, seven cannabis oil products, and a line of softgels that are still awaiting final approval by Health Canada.

 

Aphria looks beyond Canadian market

Aphria’s big-picture focus on the cannabis industry is already well beyond Canada's brand new recreational market. According to the company’s investor deck, Aphria is boasting five international expansion connections, including those in Europe. Strategic supply agreements with Germany, as well as import agreements with Italy and a strong foundation in Malta, all contribute to Aphria’s planned European expansion. That expansion plan now includes the United Kingdom.

Starting November 1, the United Kingdom will be legalizing medical marijuana across England, Wales, and Scotland. Northern Ireland will be taking its own approach to medical marijuana. The new policy does not include recreational marijuana and is only addressed toward patients with needs that cannot be met by existing medications. And Aphria is already becoming involved with Britain’s new clinical trials.

[Terra Tech CEO’s challenge to President Trump on eve of Canadian legalization: Don’t let US cannabis industry fall behind]

The company announced a partnership with Professor Michael Barnes, a leading neurologist at the University of Newcastle. Professor Barnes participated in the development of Sativex, GW Pharmaceuticals’ (NASDAQ:GWPH) second cannabis-based epileptic medicine, and is a major player in the British government’s final decision to legalize medical marijuana.

"I have long been interested in the medical applications of cannabis, and I look forward to a fruitful collaboration with Aphria, one of the leading global cannabis companies, to further the exploration of medical cannabis through clinical examination,” the professor stated in Aphria’s announcement on Tuesday.

Aphria will be collaborating with Professor Barnes on new clinical studies for Canadian and British patients to better understand the benefits cannabis can bring to different medical conditions and diseases. The partnership with Professor Barnes is strictly based on research, and no supply agreements with Britain have been made at the time of this article.

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