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Pot business now focusing over legitimacy rather than legalization




After a particularly wild year designated to the cannabis sector, it is highly appropriate for the Aphria Inc. to acquire the focus for the year 2019. Aphria is a pot producer at Canada that got attacked by the short sellers. Currently, the company is targeted by a hostile bid for takeover.

Aphria recently reported its results for fiscal 2nd quarter dated 11th January. Given this report, the fate of the company being bombarded with questions is evident. During a conference call with regards to the allegations, the company was blamed by short sellers for overpricing worthless assets at Latin America. To this, Aphria mentioned that claims made by Hindenburg Research and Quintessential Capital Management were self-serving and malicious.

This particular saga took a twisted turn in quiet days that fall between Christmas Eve and the New Year. This was when the Green Growth Brands Inc. had proposed one hostile bid to take over Aphria, that lost a quarter of its overall value in stock during the month of December. This potential offer that hasn’t been finalized as of now raised more questions about the company’s links with smaller businesses such as Green Growth.

To this, Hindenburg Research added that this was most likely a rigorous attempt by the company to showcase that they are in demand which would then spur some credible offers by bigger companies. Aphria mentioned that the offer brought out by Green Growth which is $2.1Billion vastly undervalues their company.

This fallout shall also affect the cannabis sector which would result in greater focus over corporate governance, M&A valuations, and dealing with due diligence. Aphria played a small part in this hectic year designated to the burgeoning of the cannabis sector. As the year 2018 started, the former U.S. Attorney General named Jeff Sessions pointed out the plans for legalization at the states. At the same time, the recreational market at Canada was just a small campaign being pledged by Justin Trudeau, the Prime Minister. This was also when the stocks for pot were trading way above the current levels.

The year 2018 was summed up in three words starting with legalization, going to legitimization, and finally the listing. Legalization of the medical marijuana went way beyond Canada, all the way to places such as the U.K. and Thailand. While legalization has started pacing at amazing speed, legitimating the products and business is something the company has entirely shifted its focus to.

Ivan writes about Cannabis at The Cannabis Radar. He has a degree in Nutrition Sciences from University of Oklahoma Health Sciences Centre. He likes to spend his spare time reading to his daughter or spending time with his wife.

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