Aphria exits U.S. for now with sale of interest in Liberty Health

Licensed marijuana producer Aphria Inc. says it has exited the U.S. market for now by completing the sale of its remaining holdings in Liberty Health Sciences Inc.

The Ontario-based company said it has signed an agreement with a group of buyers to sell 64.1 million shares in Liberty Health for $59.1 million.

Aphria said it will re-enter the American market and become a significant player in the U.S. cannabis industry when its federal laws are changed.

“We view this decision as only a temporary departure from investment in the U.S. cannabis industry until such time as U.S. federal cannabis laws are reformed,” CEO Vic Neufeld said in a statement. “We have always believed in the tremendous opportunity in the U.S. cannabis market, and that is no different today.”

It retains an irrevocable option to repurchase the shares for up to five years. The shares will be held in escrow until a five-year promissory note due in 2023 is paid. The cannabis company said the divestiture improves its cash position as it focuses on opportunities in Canada and other legal cannabis markets around the world. Liberty Health’s shares are listed on the alternative Canadian Securities Exchange, where looser listing rules than the bigger Toronto Stock Exchange have seen it become home for many marijuana companies.

After the Trump administration initially signalled its opposition to an Obama-era memorandum suggesting the federal government would not intervene in states where the drug was legal, the TMX group warned issuers with crossborder activities that they are not in compliance with its requirements and could face delisting. That stance helped to cement the CSE’s position as the go-to exchange for cannabis companies, allowing issuers to have U.S. exposure, provided they disclose to investors the inherent risks.