TORONTO — Cannabis company Aleafia Health Inc. says it is moving to terminate its wholesale pot supply agreement with Aphria Inc., citing a “failure to meet its supply obligations.”
It says the deal signed in September 2018 was between Aphria and Emblem Corp., which Aleafia acquired earlier this year, and it has provided formal notice of termination to the Leamington, Ont.-based pot producer.
Aphria was to provide up to 175,000 kilogram equivalents of cannabis products over an initial five-year term, starting on May 1 of this year, and receive a $22.8-million non-refundable deposit comprised of $12.8 million in cash and 6,952,169 common shares of Emblem.
Aphria says in a separate release that it is “disappointed” that Toronto-based Aleafia has chosen to terminate the deal and that it “had every intention of filling its obligations.”
It also added that as a large shareholder of Aleafia, Aphria made “good faith efforts” to ensure the deal’s continuation, but its termination frees up significant supply to service the pot producer’s brands.
Aphria adds that the parties are obligated to negotiate for 30 days after the formal notice of termination, and if a settlement is not reached and Aleafia initiates a formal claim for damages, it intends to “vigorously defend itself.”
This report by The Canadian Press was first published Oct. 8, 2019.
Companies in this story: (TSX: ALEF, TSX:APHA)
The Canadian Press