Aphria selling stake in U.S. pot producer in $20M deal

Canadian marijuana producer Aphria Inc. on Friday announced a deal to sell its holding in Arizona cannabis company Copperstate Farmsto Liberty Health Sciences Inc. for $20 million.

The move is aimed at helping Aphriaavoiding issues with Canadian equity markets and regulators.Back in October, theCanadian Securities Administrators set out "specific disclosure expectations" for marijuana industry firms with investments in the U.S., whileTMX Group Limited, whichoperates the Toronto Stock Exchange, said it mightmove todeliststocks of marijuana companies with operations in the U.S.

In addition, U.S. Attorney General Jeff Sessions in January rescinded anObama-era memo that suggested that the federal government would notintervene in states where the marijuana is legal.

VicNeufeld, Aphria's chief executive officer," said in a release that the sale ofCopperstateis an important step in the company's efforts to workcollaboratively with theTSXand Canadian securities regulators regarding the divestiture of itsdirect investment in theU.S.cannabis business.

"We are assessing solutions that meet the needs ofAphriawhile protecting shareholder interests and maintaining shareholder value," Neufeld said.

Aphriaholds a minoritystake in Liberty Health Sciences. A recent report suggested Aphria is planning to sell 25 per cent of its 38 per centstake in Liberty.A spokesperson saidAphria is "exploring and consideringstrategic alternatives with respect to its U.S.cannabis relatedinterests, including the possible divestiture of its investments tostrategic, long-term and committed investors in the cannabisindustry."

Based in Snowflake, Ariz., Copperstate owns approximately 1.7 million square feet of greenhouses, of which approximately 348,000 square feet are in production of medical cannabis.

Amid a sell-off in marijuana stocks, Aphriashares were down more than 10per cent Friday on the TSX at $13.88.

The Canadian cannabis market has seen a wave of consolidation recently with Aurora Cannabis striking a deal to acquire CanniMed, while Leamington, Ont.-basedAphriabuying Broken Coast Cannabis in a $230-million agreement.