Aphria, Inc. (APHA) CEO Irwin Simon Hosts Annual Meeting of Shareholders (Transcript)

Aphria, Inc. (NASDAQ:APHA) Annual Meeting of Shareholders November 17, 2020 2:00 PM ET

Company Participants

Irwin Simon – Chief Executive Officer and Chair Board of Directors

Carl Merton – Chief Financial Officer

Tamara Macgregor – Chief Corporate Affairs Officer

Christelle Gedeon – Chief Legal Officer

Jim Meiers – Chief Operating Officer of Aphria and Leamington

Denise Faltischek – Chief Strategy Officer

Lloyd Brathwaite – Chief Information Officer

Renah Persofsky – Vice-Chair and Chair of the Nominating and Governance Committee, Independent Director

Jodi Butts – Nominating & Governance Committee Member, Independent Director

John Herhalt – Chair of the Audit Committee, Independent Director

David Hopkinson – Nominating and Governance Committee & Compensation Committee Member, Independent Director

Tom Looney – Audit Committee & Compensation Committee Member, Independent Director

Walter Robb – Chair of the Compensation Committee & Audit Committee Member, Independent Director

Kate Heller – ICR

Conference Call Participants


Ladies and gentlemen, thank you for standing-by and welcome to the Annual Meeting of Aphria Inc.

I would now like to hand the conference over to your speaker today, Mr. Irwin Simon, Chief Executive Officer and Chair Board of Directors of Aphria Inc. Sir, you may begin.

Irwin Simon

Thank you, Justin. Good afternoon. I’d like to welcome you to the Annual Meeting of Holders Common Shares of Aphria Inc. I will now call to order this meeting of the shareholders of the Company. My name, as Jason said, Irwin Simon, and I am the Chief Executive Officer and Chairman of the Board of Directors of Aphria, Inc. In accordance with the Company’s bylaws, I will chair today’s meeting.

It is my pleasure to welcome the shareholders, directors, officers of Aphria and the guests that are present today. The persons entitled to attend and vote at this meeting are the holders of common shares of the Company or their valid appointed proxy nominees as of the record date. Also in attendance today are Carl Merton, our Chief Financial Officer; Christelle Gedeon, our Chief Legal Officer; Jim Meiers, Chief Operating Officer of Aphria and Leamington; Denise Faltischek, Chief Strategy Officer; and Lloyd Brathwaite, Chief Information Officer. Also in attendance are Renah Persofsky, Jodi Butts, John Herhalt, David Hopkinson, Tom Looney, Walter Robb, who are also nominated for election at this meeting.

This year, to proactively deal with unprecedented public health impact of COVID-19 to mitigate risk of the health and safety of our employees shareholders, the community and stakeholders and to ensure compliance with local laws or orders restricting the size of public gatherings in response to COVID-19, this meeting, as you’re well aware, is being held virtual. At this meeting, it is being held virtual via live audio cast. We think it is necessary to set out a few rules for the orderly conduct of this meeting.

For the purpose of this meeting, voting on all matters will be conducted by electronic ballot through the Lumi System. Only registered shareholders and validity appointed proxy nominees are able to vote by electronic ballot. Voting on these business items will occur after the presentation of that business item. Note that any votes cast by electronic ballot during the meeting will supersede any votes previously submitted by proxy.

Therefore, we recommend that shareholders that have already voted by proxy and do not wish to change their vote, do not vote on polls taken during the meetings. Those in attendance who have registered as guests are not able to move motions or vote, but are invited to submit questions at the end. When you’re asked to vote on the Lumi platform, a voting option page for the applicable resolution will appear on the virtual interface.

You’ll only have a certain amount of time to vote when the polls are open. Once the electronic balloting closes, the voting page will disappear, and your votes will automatically be submitted. We will provide you with all vote results for all resolutions at the end of the meeting. For specific vote tabulations, please see Aphria’s reporting the voting results, which will be posted to Aphria’s SEDAR profile, www.sedar.com, shortly after the meeting.

Questions or objections in respect of a motion can be submitted by any registered shareholder as applicable or any validity valid appointed proxy nominee using the Lumi messaging interface. Please note that there may be a delay of approximately 15 seconds before the moderator will be able to see a submitted question. Therefore, at various intervals throughout the meeting, we will pause and provide you 15 seconds to ask your question using the messaging interface.

If you feel 15 seconds is not enough time, please indicate that you have a question using the messaging interface, and we will pause the meeting until you’ve had an opportunity submit your questions. Although the questions can be submitted through the meeting, they will be addressed at the appropriate time during the meeting. Please limit your question to one topic relating to today’s subjects matter and keep your questions short and to the point.

For each question we answer, we will read the question and provide a neural response. Any questions which are already answered or that are redundant or repetitive will not be answered. For the sake of expediency, the Company has arranged for certain shareholders, namely Carl Merton, Tamara Macgregor to move in second motions today, respectively. We will now proceed with the formal portion of the meeting.

The appointment of secretary and of scrutineers, unless there’s any objection, Carl Merton, Chief Financial Officer, will act as Secretary of the meeting, and Computershare will act as a scrutineer of the meeting. If you have any objection regarding the appointment of the Secretary or the Scrutineer, you now have 15 seconds to submit your objection via the message link.

The constitution of the meeting. The purpose of today’s meeting is set out in the management information circular dated September 23, 2020, which I’ll refer to as the circular made available to shareholders on October 15, 2020, together with the notice of the meeting, which I’ll refer to as the notice and the form of proxy or voting instruction form as applicable. The circular and other meeting materials have been posted on the Company’s website at aphria.com investors and on the Company’s profile at www.sedar.com.

I have here attention from Computershare Trust Company of Canada and attention from Broadridge Investors Communication Corporation, indicating that proper notices of the meeting have given in accordance with the Business Corporation Act of Ontario and the bylaws of the Company. I direct that a copy of such proof of service be annexed to the minutes of this meeting as a schedule. Copies of the circular and other meeting materials are available on the Company’s profile or SEDAR. I will dispose with the reading of the notice and will now move to the Scrutineer’s report and quorum of the meeting.

Scrutineers report and Quorum. The scrutineer has provided me with preliminary report regarding the shareholders attendance in today’s meeting, 147 shareholders in person or by proxy representing 105,406 562 shares, which represents 36.51% of the outstanding shares represented at this meeting. I have been advised by the scrutineers that there are sufficient shareholders here in person or represented by proxy to constitute a quorum. I direct that the formal scrutineer’s report be annexed to the minutes of the meeting as scheduled.

The last annual and special media company was held on November 14, 2019. The minutes of that meeting are filed in the Company’s minute books and are available for inspection. This meeting properly constitute. I now declare the meeting has been duly called and properly constituted for the transaction of business. Our financial statements and reports of the auditors. The first item of business is the presentation of the Company’s consolidated financial statements for the fiscal year ended May 31, 2020. And the auditor’s report thereon, unless there is any objection, I will dispense with the reading of the auditor’s report.

Election of directors. The next item of business is the election of directors. The seven directors to be elected by the shareholders of the Company shall hold office until the close of the next annual meeting of the shareholders or until his or her successors are duly elected or appointed. Irwin D. Simon, Renah Persofsky, Jodi Butts, John M. Herhalt, David Hopkinson, Tom Looney and Walter Robb, have been nominated as directors for the ensuing year or until their successors are elected or appointed. Each of the person is nominated has been confirmed that he or she is prepared to serve as a director. Each of them qualifies as a director under the provisions of the Business Corporation Act of Ontario.

Mr. Merton, would you kindly introduce a motion proposing the election of these seven directors.

Carl Merton

I move that each of the seven persons nominated the elected directors of the Company until the next Annual Meeting of Shareholders or until such time as their successors have been duly elected or appointed.

Tamara Macgregor

Mr. Chairman, I second that motion.

Irwin Simon

Unless there are any questions, we will proceed to voting. You have 15 seconds to submit your questions via the message link starting now.

I would ask shareholders and proxy holders present to vote online. We will now pause for one minute while you record your vote on this motion.

You’ll be able to vote for each director individually. Computershare, please put the ballots for the election of directors on the screen.

That’s a long minute. Voting on this motion has now closed. I will now move to the next item of business. As noted earlier, voting results for all resolutions will be summarized at the end of the meeting. The appointment of remuneration of auditors. The next item of business is to appoint PricewaterhouseCoopers, LLP, as the auditors of the Company for the ensuing year and to authorize the directors to fix their remuneration.

I will call upon Mr. Merton again to make the motion.

Carl Merton

I move that PricewaterhouseCoopers LLP be appointed as auditors of the Company until the next annual meeting of shareholders and that the directors be authorized to fix their remuneration.

Tamara Macgregor

Mr. Chairman, I second that motion.

Irwin Simon

Unless there are any questions, we will proceed to voting. You now have 15 seconds to submit your question via the message link starting now.

I would now ask shareholders and proxy holders present to vote online. We will now pause for one minute while you record your votes on this motion.

Computershare, please put the ballot for the appointment of PwC as auditor on the screen.

Voting has now closed. We will now pause the meeting to allow the scrutineer enough time to tabulate the votes received on all resolutions voted at this meeting. I will be back shortly with the voting results for the meeting.

I now have been advised that the Scrutineer has completed the tabulation of votes for all resolution. Based on the tabulation, I can confirm that the requisite approvals have been obtained for the election of the nominated directors and the appointment of auditors. The voting results of this meeting will be posted on the Company’s SEDAR profile at www.sedar.com after this meeting.

Termination of the meeting, the formal items of business are set out in the notices now have been dealt with, if there isn’t any other business, we’ll proceed to terminate the formal part of the meeting. Is there any other further business? If you’d like to raise any further business at this meeting, you can do so using the message link. You have 15 seconds to submit any further business using the message link.

As there is no further business, may I have a motion that this meeting be concluded?

Carl Merton

Mr. Chairman, I move that the meeting be concluded.

Tamara Macgregor

Mr. Chairman, I second that motion.

Irwin Simon

Is there any objection to this meeting being terminated? On behalf of the Board of Directors and my fellow employees, I would like to thank you all for attending today. I will now go into an informal part of the meeting. Thank you very, very much.

Thank you very much for joining us. Good afternoon, everyone. On behalf of all of us at Aphria, I appreciate you spending the time with us today. Please reference our website for a copy of today’s annual meeting and our presentations. Again, I would like to welcome our Board members, executive team, and our newest team from SweetWater Brewing, one of the largest independent craft brewers in the U.S.

I am proud of the execution of our global team in fiscal 2020. We have done a lot. When you look at all we achieved in fiscal 2020, we are very pleased with the progress we’ve made from where we started just over a year ago and our ability to generate consistent results. As you heard me say, what a difference are you to make?

A cornerstone of our long-term strategy is to focus on and prioritize those opportunities that have the potential to deliver the highest return for growth. This enabled us to achieve five straight quarters of positive adjusted EBITDA with Aphria being the only adjusted EBITDA positive public traded licensed producer in the industry for this fiscal year. And you’ve heard me say many, many times, cash is king, and cash will continue to be king.

In this young, ever-changing and growing cannabis industry, having a strong cash position and a strong balance sheet has never been more important. During the fiscal year, we enhanced our capital structure to maintain our strong financial flexibility. To this point, most recently, we announced our agreement to acquire SweetWater Brewing Company, which I’ll discuss in more detail shortly.

Importantly, we continue to have strong financial flexibility to-date, and we will well into the future. In fiscal 2020, our team reacted quickly to COVID-19 global pandemic and the resulting changing market dynamics. We continue to ensure the health and well-being of our more than 1,000 employees around the world.

On a daily basis, I’m reminded how agile and resilient our team is at Aphria; and as we serve our valued patients, consumers, providing them with our medical and adult-use cannabis products. Even in the face of this global epidemic, our team made substantial changes across our entire organization to propel free forward. In line with our business transformation efforts, more specifically, we solidified our Canadian cannabis foundation, we increased market share for our adult-use cannabis brands.

We demonstrated our operational excellence as the low-cost, high-quality global cannabis producer, thanks to our tremendous team in Leamington and Aphria One and Aphria Diamond. We did an excellent job with overall cost management and control, while generating solid top line growth. And as I mentioned earlier, we made key strategic decisions to strengthen our balance sheet and cash position.

I’m incredibly proud of what we achieved in fiscal 2020 to recap a few key financial and operational highlights that are included. We recorded the highest level of annual revenue with $543 million of cannabis sales. up 129% from the prior year. It was the third highest level of Canadian cannabis revenue in the industry. We reported the second highest level of adult-use cannabis revenue with $150.4 million. And the highest level of adult-use in the last six months of fiscal 2020. And

From a gross profit perspective, it was the highest level of gross profit before the fair value adjustment with $133.8 million. We reduced the cash cost to produce dried cannabis nearly 25% to $1.02 per gram from the prior year. And our adjusted EBITDA was the highest in the industry at $17 million, and this compares to adjusted EBITDA loss of the prior year of $27 million.

From an operational perspective, we had strong, strong momentum across our adult-use and medical cannabis brands in fiscal 2020. Aphria has maintained its number one recreational market share position in both Alberta and Ontario, two of the largest provinces in Canada. We also have an ambitious share growth targets in place for the British Columbia and Québec markets, and have plans in place to grow our market share nationally.

In Ontario, working together with the OCS, we’ve increased Aphria’s market share performance from 6% to a record high of 19% in September. All within just2 years since the legalization of adult use cannabis, what great success that is. We’ve also maintained the top license producer position in Ontario for six months in a row. Since May of this year, we’ve doubled our total units sold since April. We’re very proud of this and this happening during this time of COVID-19.

In the last three months that ended October 31, Aphria led sales in two large categories, dry flower and vape, which represents 75% of the total cannabis sales. Aphria has shown a dominant 24% share of this growing high-margin vape category and a market-leading 17% share of the dried flower category in both brick-and-mortar retail and online channels in Ontario. What a great accomplishment, well done team, and there’s more to come.

This was achieved through strong sales across good supply, RIFF and Solei, which are all in the top 10 brands sold in Ontario and supported by Broken Coast, which leads the super premium segment, helping to maintain our strong margins. Overall, our brands have gained momentum in fiscal 2020, and we’re excited about our future growth. Our latest innovation includes fatigue P’TITE POF, a value brand Inspire Québec a culture and recently hit shelves across the country with a large format, 15-gram and 25-gram plower.

B!NGO has been well received by the market and allows us to compete separately in the value segment with differentiated products. We’ve experienced strong initial sell-in for both P’TITE POF and B!NGO. These two brands complement our existing high-quality brand portfolio, including Good Supply, Solei, RIFF and Broken Coast. And remember, these brands are only a couple years old and they’re doing within the 100 millions of dollars of sale.

Broken Coast remains a top super premium brand nationally in Canada, delivering exceptionally quality standards. We’ve also continued to expand our portfolio of products in order to meet consumer demand with the launch of more than 40 new SKUs over the past few months, and with plans to launch even more innovative products in the up and coming months ahead. We believe innovation is one of the most important drivers of growth, and we have a strong innovation pipeline in place to succeed.

Aphria’s success will be — continue to be driven by our differentiation portfolio of brands and products aimed at delighting distinct consumer segments. We are increasingly connecting with patients and consumers through medical and adult-use brand positioning and product innovation to drive our growth. We maintained strong foundations in Canada where we expect momentum to accelerate. As I have mentioned previously, consumers’ behavior is changing in so many ways. And this change continues to accelerate.

Through our data insights, and understanding our consumer preferences, we believe we will be well positioned to capitalize on these changes in the cannabis market. From a medical perspective, in Canada, we continue to strengthen our medical cannabis business, including restructuring the medical teams to ensure we have the right amount of dedication and focus on growing our medical business and our focus on brand building and becoming that trusted partner to physicians and patients.

We have been partnering with clinics by delivering educational material to support them for caring for their patients as well as providing resources during COVID-19. Internationally, we experienced strong growth in Germany with CC Pharma, our distribution business generated net revenue of over $369 million for fiscal year 2020.

In establishing our international footprint, we have focused on and prioritize those opportunities where we have identified the biggest opportunities for growth. With low-cost of capital that can drive near-term profitability. We continue to leverage our market leadership as we develop our medical cannabis markets internationally.

In Germany, we’re leveraging our strong medical platform and our multifaceted international operation which combines domestic cultivation and import permits, large distribution infrastructure, and that will increase our access to high-quality medical tests for the patients that we will service worldwide. In Germany, we recently completed our first certified EU GMP shipment of dry flower from our Aphria One facility to our German subsidiary, CC Pharma.

This is a significant milestone for Aphria, one that strengthens our position as a leading cannabis company in Germany and in the European Union. We are also excited about the introduction of Aphria Strong 9, the Company’s first THC dominant medical cannabis flower in the German market. The launch of this THC dominant variety marks the beginning of an extensive Aphria Rx product portfolio within the German market.

Additionally, we expect our cultivation facility in New Monster, Germany will be completed this coming quarter. Focusing on our international opportunities, we currently maintain operations in Germany, Italy, Malta, Colombia and Argentina, as well as strategic relationships in Israel, Denmark and Poland. The U.S. will be a great addition once we complete our acquisition of SweetWater that will close later this month. We most recently announced an agreement to acquire SweetWater Brewing Company.

We’re incredibly excited about the opportunities in Canada and the U.S. from this business combination. SweetWater’s flagship 420 beverage offering and their award-winning lineup a year-round seasonal and specialty beer and other beverages are closely aligned with our cannabis lifestyle. This acquisition will be immediately accretive and aligns with our strategic focus and emphasis on our highest quality priority returns. We believe it will provide a compelling return for our use of cash and our strong balance sheet.

In addition to acquiring the strong brand and accretive business, this acquisition positions Aphria was a scalable infrastructure within the U.S. market, which allows us to access the market quickly in the event of federal legalization. The acquisition will create our larger and more diversified leading global cannabis and lifestyle company.

This acquisition also provides the addition of key partnerships with leading U.S. distributors retailer and on-premise consumers, strengthening our ability to develop and new products in the U.S. for Aphria products. We will build awareness for our adult-use brands, Broken Coast, Good Supply, RIFF and Solei in the U.S. ahead of potential future state or federal cannabis legalization.

We will be able to leverage our existing brands to introduce them via Craft Beers and other beverages as well as pursue opportunities for other nonalcoholic health and well-being beverages that are up and coming trends in the U.S. At Aphria, we’re also excited to be able to grow market share within the Canadian beverage alcohol sector and introducing their 420 brand and some of their other great beverages.

We’re also adding SweetWater’s talented team of approximately 125 employees who bring substantial operational experience in the Craft Beer and the beverage industry and a proven track record of developing, building and growing strong consumer brands. Our team has all ready a robust plan in place for the future growth of Aphria and SweetWater branded offerings, and we look forward to realizing revenue synergies in the coming quarters ahead.

We are excited to take this important step on our journey of becoming a global consumer packaged goods company throughout a robust portfolio of cannabis and craft brew lifestyle brands that Inspire and Empower the worldwide community to live their very best and exciting life.

And you heard us emphasize on a consistent vision for building a sustainable, profitable and growth company. Our announcement to acquire SweetWater is a perfect fit with our long-term growth objectives a cornerstone of our U.S. strategy and a strong complement that we believe will return compelling benefits for our financial rewards.

Going forward, our team is focused on a five-point strategic plan, gain additional market share maintain our position as one of the lowest-cost producers without sacrificing any quality of any of our products, increased innovation both through our compelling cannabis and our beverage brand offerings.

And in the U.S. and internationally, we’re driving brand awareness corporate messaging to support Aphria’s future growth opportunities for award-winning brands and to enhance these efforts, we have hired why communications. We understand the importance of building brand equity and want to tell the world about that in an effective way. I’m confident they will help us tell our unique story in ways that connect the needs of our patients and consumers and partners.

And finally, as I said earlier, cash is king, so you can expect us to generate continuously improvements in our cash position and balance sheet. I also want to thank the NASDAQ as our new exchange partner, where our Aphria started trading in the U.S. on June of this year. The move is a reflection of our ongoing commitment to find cost-efficient ways of operating our business, so we can continue to deliver long-term value to our shareholders.

We’re also committed to corporate social responsibility and are exciting to publish our CSR report later this month. I am continuously asked our leadership team and entire organization to evaluate opportunities where we can be better. More supportive, more united, not only as a combat to this global pandemic but also champion the advancement of inclusion of diversifying both at Aphria and externally.

As a purpose driven company, we take great pride in leading with our core values, which are rooted in a setting for a change that innovation in our industry and beyond. This starts with our talented and dedicated global team from those in our production facilities, international operation, corporate offices and, of course, our Board of Directors. Everyone at Aphria gets it and contributed to our success and achievements in fiscal year 2020.

And we are consistently, and I mean consistently taken a diversified approach to our innovation, being great corporate citizens, strategic partners and our global expansion. I’ll say it again, what a difference a year makes in an industry that’s only a few years old and has undergone significant change. Aphria has emerged as a clear leader, and we will continue to do that. Helping both to define and change the cannabis industry in Canada internationally, and we hope in the U.S. one day.

In closing, at a free up, we have, and we’re setting ourselves apart from the rest of the cannabis industry, generating some of the strongest sales growth maintaining one of the strongest balance sheets and cash positions while providing compelling brands to consumers and patients all help us to create to diversify global businesses.

We believe we remain well positioned for continued growth, Canada, internationally, and I’ve said the U.S. We appreciate the support of our shareholders look forward to executing on future value-creation initiatives for the short-term and the long term. With that, myself, our team and our Board are available for questions.

I now turn this over to the operator for questions. Thank you very much.

Question-and-Answer Session

A – Kate Heller

And we have a question from one of our shareholders. So Irwin, there are media examples that do not include Aphria in its rundown of Canadian LPs and CNBC and others are included in this. And so we’d like your perspective on why management thinks that’s happening or things you’redoing to get increased exposure for Aphria.

Irwin Simon

Thank you, Kate. So listen, I — and Tim, thank you for your question, and I can tell you one thing. It’s not the first time you asked me this. And I think I was very clear. I’ve heard you guys. Communication is important for us and again, at the end of the day, we will get notice as we continuously deliver results. We will get notice using a PR firm that will help us to get in front. As I go back and say, I’ve been asked to do CNBC multiple times where I think a lot of these other companies have not.

And again, in delivering results will get us in front of CNBC. And other broadcast and other PR out there, and I think that’s the key that we can pound or chest. I don’t want to be on CNBC or BNN or anything, just talking and being a talking horse or just talking with nothing to say. I think it’s important that we have a lot of great things to say. And that’s what I make sure when we’re out there on CNBC or BNN, we got a lot of great things to say.

Kate Heller

Our next question is. Would Aphria ever consider purchasing shares in the open market or demonstrating their confidence in the stock via a share buyback?

Irwin Simon

So thank you, Kate. With that, and we’ve had this question many, many times, I think share buybacks in a growing company and a company that has the ability to use its cash, whether for acquisitions or for other things. Right now should be where you’re using your cash. It’s difficult to be out there raising cash and until we started to generate cash, which we’ll be doing, I think that is when we should absolutely be looking when we should be buying stock back in a stock buyback program. And there will be a time that I would be loved to be buying back as much stock as we can buy back at the time when we’re generating enough cash to be able to do that.

Kate Heller

Okay. And our last and final question is around shareholder lawsuits. That may or may not be moving forward against the Company or former directors and officers of the Company. And as a matter rider of the call, I’d just like to say and answer that on behalf of the Company that Aphria discloses and updates all material litigation in its public filings and reports on SEDAR. Beyond those disclosures, we don’t comment on any ongoing litigation matters. And with that, I’d like to turn it back over to Irwin.

Irwin Simon

Thank you, Kate. Is there any other questions?

Kate Heller

Not at this time. Actually, hold on, we do have a few other questions if you’re still there. That just came in. Bear with us as we compile them. Can you comment on the timing of when you expect to close the SweetWater acquisition?

Irwin Simon

As I said before, we hope to close this by the end of November.

Kate Heller

Can you also elaborate on any potential steps that you would take if the U.S. decides to federally legalized cannabis?

Irwin Simon

Listen, I think, as I’ve said before, cannabis is legal in 35 states in one way or other, one at every three Americans today have cannabis legalized, whether it’s medical or rec in a recent poll, 67% of Americans want cannabis legalized. Now that we have a U.S. subsidiary, and we’re operating in the U.S. and we’re operating in regards to the alcohol control board. I think, as you see in Canada, it very much complements that.

So with that, having a business in the U.S. would give us opportunities to either be part of licenses, be granted licenses as being a leading grower and LP in Canada today and having a very significant business in Europe. So I would see us being an active player in the U.S. market if it became federal legalized. And depending upon if medical is only legalized and which ensures the bank act and then it goes by price by state by state, which I would expect that’s what would happen.

Kate Heller

Okay. And another question is around advertising. And for Aphria to be successful if you think you need to invest in marketing or advertising.

Irwin Simon

Good question, brand equity, brand equity, brand equity and everybody needs to know your brands. And the first is getting our brands into the U.S. and the way we’re going to do that. Is through the beverage industry right now, and we will introduce, as I’ve said, RIFF, Good Supply and Solei. And yes, we’ll need additional advertising from a U.S. market. Now there’s limited to what we can say and what we can do in regards to advertising.

And again, there’s also limited what you can advertise in the whole alcohol. But I’m a big believer today. In social media, I’m a big believer in advertising. I’m a big believer of getting out there. In regards to getting your brand, your awareness and all the great attribute your business. That’s why we hired why, and that’s why we’ve stepped up tremendously our whole communication effort.

Kate Heller

And do you see Aphria getting into a JV with an American MSO?

Irwin Simon

I see Aphria looking at multiple JVs in the marketplace. And I think, again, with us buying sweet water it introduced a lot of options in regards to JVs in regards MSOs. But I want to be in JVs with MSOs that have growth that has profitability where we’re just not a cash cow and their bank. We’re not a good bank to anybody. So absolutely, we would look to partner at the right time with an MSO, and we all look to partner in other categories where it makes sense. And I think, again, with SweetWater, it’s brought a lot of attention of why Aphria would be a great partner.

Kate Heller

Great. And at that time, we don’t see any further questions.

Irwin Simon

Kate, I can see some other questions. I have no problem to answer them, but management reluctant to buy shares in the open market. I don’t think management is reluctant to buy shares. I think a big part of managements’ compensation, are contributed share units and stock. And with that, they’re actually using money of coming out of their pocket and achieving objectives in gold, and that’s a big part of their compensation is RSUs.

So I see them in essence buying back shares from a standpoint there. In regards to the ATM, I can’t really comment on that. And at the right time, we will come out and publicize about our ATM and the use of that and what was used. Again, as we’ve said before, there was an ATM that was out there for acquisitions, and we will come back and comment on that.

So with that, I think that is all the questions for today. I thank, again, everybody. I come back and I really am feeling good sense. And I think, about where Aphria sits today, being the number one cannabis company in Canada in regards to market share in many of the markets in regards to its cash position in generating cash and its EBITDA. We’ve gone at this alone. We didn’t have partners like some of the other cannabis companies have.

And we’ve done a great job in moving this forward. And this is because of the great people that work there, our brands, our strategy and our focus. And I’ve said before, we’re only a couple of year on industry. And if you go back and look at most technology companies that are only a couple of years old, I don’t think they have the same track record. And it was pointed out to me, early on a company like Beyond Meat has almost a similar sales to us, less cash, lose a lot more money and is trading at 10 times our market cap.

So with that, a big important part was for us to be in the U.S. market, build out the awareness of our brand. Build out the awareness of who Aphria is, and that’s something that we will continuously do. I appreciate the shareholders. When you invest in us, you spend money it’s important to me and the management team that you get a return on your investment. And I can guarantee you we are working 24/7 to ensure that. We want to be able to communicate as much as we can with you. We want to be able to get out there and tell the Aphria story because we’re proud of the Aphria story.

So with that, thank you, everybody, for attending today. Listen, living in this world that we’re living in today and how we’re managing our business, whether it’s remotely through Zoom calls, through virtual shareholder meetings. I think we’re doing an incredible job, at the same time, keeping every single employee safe. What I say about Aphria in the Canadian market, we’ve created over 1,000 jobs. We’ve invested in regards to building out facilities over $0.5 billion. We’ve contributed a couple of hundred million dollars a year back in tax dollars.

And we have done a great thing in regards to providing great cannabis products that go through quality, that go through regulatory that are safe and taking it out of the hands of the illicit market, which is not good for the consumer. We see the Canadian market, which is about a $6 billion market today, which will continue to grow.

As I’ve said with my five-point plan, there will be over 3,000 stores in Canada, which will grow our market. We’ll take additional market share. We will come out with new products and innovation. We look to continuously take share away from the illicit market. And for the first time, the illicit market is surpassing — the legal market is surpassing the illicit market in market is surpassing — the legal market is surpassing the illicit market in growth today.

So we’re definitely making a lot of good things happen. If you take our brands and brands today like sole or good supply that are in the $200-plus million of sales and take them out three to four years and multiply that us getting to our $1 billion in Canadian cannabis sales is something that is very, very achievable.

So again, be safe. Thank you very much, and hope to speak to you soon, and have a good day.


Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.

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