The Aphria (APHA) saga continues. The Canadian cannabis company announces its subsidiary ABP has signed a Letter of Intent to enter an agreement regarding the cultivation of cannabis with the Argentinian state-owned company Cannabis Avatara Sociedad del Estado or “CANNAVA.” The idea is to expand Aphria’s operations in Argentina’s province called Jujuy and scale production in order to provide people access to “high-quality, low-cost medical cannabis.” However, it should be noted a short report was released on Dec. 3 alleging the company had made illegitimate business dealings in a few Latin American countries, one of them being Argentina. Between today and Dec. 3, the stock has fallen around 33%.
The new agreement will help ABP establish a new facility to farm the marijuana and a place to manufacture cannabis products as well. The short report suggested (with photographic evidence) that an original asset purchased in Argentina by Aphria for C$50 million was only in Aphria possession for 6 days and was sold off to an insider for a quick gain of C$23 million. Additionally, the office space the company referred to as a “Leading Importer and Distributor of Pharmaceuticals” was considered an empty, dilapidated office by the report’s investigator.
“Aphria is strategically positioned to be among the first companies to produce locally, and eventually commercialize its products in Argentina at much lower cost,” said Gabriel Meneses, Vice President, Latin America and Caribbean at Aphria. “We are proud of the relationship we have built with the Province of Jujuy after months of discussions and planning, and thankful for their support.”
“This agreement advances Aphria’s international expansion strategy and leading presence in emerging cannabis markets like Argentina,” said Jakob Ripshtein, President of Aphria. “We are thrilled to promote opportunities for medical cannabis in close partnership with the Argentinian federal and Jujuy provincial governments to support the cultivation, extraction and future development of cannabis products in this important market.”
The report hasn’t seemed to deter too many analysts from recommending the stock. TipRanks analytics shows the stock is doing well among analysts on Wall Street. Out of 11, 9 are bullish, 1 is sidelined and 1 is bearish. The consensus price target of $14.50 shows a 180% potential upside. (See APHA’s price targets and analyst ratings on TipRanks)