In 2018, Aphria Inc (NASDAQ:APHA) announced that it entered a deal with Aleafia Health Inc (OTCMKTS:ALEAF). The terms of the deal outlined that Aphria would supply 175,000 kilograms (38,580 pounds) of cannabis to Emblem Cannabis Corporation, a subsidiary of Aleafia. This would happen over a period of five years ad was to begin in May 2019.
However, in August 2019, Aleafia Health discontinued the supply deal, alleging that Aphria failed to honor the supply obligations. This was the beginning of a long-standing dispute and arbitration proceedings between the two Canadian cannabis producers.
Settlement and Dismissal of the Arbitration Proceedings
Nothing lasts for between two or more parties who cannot avoid working together. The two parties would later decide to resolve their dispute over the canceled supply deal voluntarily.
In the settlement agreement, Emblem would receive $29 million, which would include a $15.5 million cash payment. The company would also receive $10 million worth of common Aphria shares, which are tradeable and transferable freely in Canada.
To sum it all, each of the parties would mutually drop all existing and potential claims and terminate the arbitration proceedings.
According to the CEO of Aphria Inc, the settlement was necessary and timely with the growing growth and expansion of the cannabis industry. Irwin D. Simon. He said, “Today’s settlement announcement allows all of us to avoid unnecessary distraction and the potential expense of prolonged litigation, and importantly, to continue to focus on the future.”
Aphria Is Well-Positioned To Honor All Supply Commitments across Canada
Following the legalization of recreational cannabis in 2018 in Canada, the sales have risen steeply, and the Canadian cannabis market has been progressively growing. The country has reported an average of 10% increase in the number of Canadian patients receiving medical cannabis.
However, despite the growing demand, Aphria, a leading global cannabis company, is still on record of being able to meet its supply obligation. It has the capacity for international markets and has received massive support from its partners. The company has set a standard of low-cost production of high-quality cannabis. Its commitment is to bring an innovation breakthrough to the global cannabis market.
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