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Cannabis firm Aphria grows Q2 revenue, reports CA$120.6M net loss

Canadian cannabis company Aphria on Thursday reported increased quarterly revenue for the quarter ended Nov. 30, with a net loss of 120.6 million Canadian dollars ($95.3 million).

The Ontario-based firm posted net revenue of CA$160.5 million, a 10% increase over the previous quarter.

Net cannabis revenue comprised CA$67.9 million of Aphria’s net quarterly income, compared with CA$91.7 million in international distribution revenue from its German subsidiary, CC Pharma, and CA$881,000 in net beverage alcohol revenue from its U.S. subsidiary, SweetWater Brewing.

Adjusted EBITDA, a measure of profitability, was CA$12.6 million.

Aphria claimed the No. 1 position in Canada’s adult-use marijuana market during the quarter with a 13% share, citing November 2020 data from Seattle-based cannabis analytics firm Headset that covers some major Canadian markets.

On a Thursday earnings call, Aphria CEO Irwin Simon said the company believes recreational marijuana legalization in Europe “will happen sooner (rather) than later.”

Simon, who was Canada’s highest-paid cannabis executive in 2019, has previously asserted that Germany will become Europe’s first legal recreational cannabis market, although that prediction has not yet played out.

Asked by an analyst to explain his optimism about European legalization, Simon cited “intel” from his staff that it “could happen this year.”

“That’s what I’m hearing back from lobbyists and our political relationships over there,” he said.

“Europe is usually a lot more progressive than the United States. So that’s why I see legalization happening in Europe sooner than later.”

With increasing odds of federal reform of cannabis laws in the United States in the wake of a Democrat-controlled Senate, Simon said Aphria is “ready and well-positioned for it.”

Aphria is due to merge with competitor Tilray this year, and Simon said Tilray’s Manitoba Harvest hemp foods subsidiary, along with Aphria’s Sweetwater subsidiary, will “provide us with thousands and thousands of distribution points for our products across the natural-, mass-, club- and grocery-sales channels, as well as via e-commerce.”

David Klein, CEO of Aphria competitor Canopy Growth, recently told Canadian business news outlet BNN Bloomberg that he expects to enter the U.S. within a year, capitalizing on its opportunity to buy U.S. multistate operator Acreage Holdings if the U.S. legalizes marijuana at the federal level.

Simon outlined how Aphria’s U.S. strategy differs from Canopy’s.

“Going out and buying a piece of a company today is something that we can easily do,” he said.

“But I like the idea of buying assets, like we did with Sweetwater or Manitoba Harvest, that can easily translate into legalized cannabis THC products when the market allows.”

Simon also raised the possibility of importing Canadian-produced cannabis into the U.S. but acknowledged the many unknowns surrounding U.S. legalization.

“I hate to get out in front and guess, and go in there and make big bets for our shareholders, and make big bets with an unknown, is not something I would let Aphria and Tilray do,” he said.

But when U.S. federal legalization does occur, Simon added, “we’ll be ready to buy, to partner, to greenfield.”

“I think that’s what’s important, that we’re circling the wagons instead of getting on the wagon now.”

Aphria trades as APHA on the Toronto Stock Exchange.

Solomon Israel can be reached at [email protected]

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